Fewer sales from international tourists due to the strong dollar, growing pains in omnichannel, bad winter weather, the West coast port strike and lower-than-expected general merchandise, apparel and furniture sales all acted as a drag on Macy’s sales and earnings in the first quarter, the company reported.
Macy’s reported sales of $6.23 billion, down 0.7% from $6.28 billion in Q1 of 2014 and below the Reuters analyst consensus of $6.32 billion. Earnings per share were 56 cents, down from 60 cents a year ago and below the Reuters consensus figure of 63 cents.
“We reorganized our merchandising, planning, and marketing functions at both Macy’s and Bloomingdale’s at the start of the year to maximize our omnichannel opportunities,” Macy’s CFO Karen Hoguet told analysts. “We did this to accelerate growth, and we are confident that we made the right changes, but there is clearly a learning curve, and it is steeper than we had expected. We are hopeful that as the year progresses this new organization structure will enable our teams to positively impact our results.”
The omnichannel reorganization, she said, caused “inadvertent but short-term disruption.”
Hoguet said the port strike, which was settled in February, impacted sales throughout the quarter. “Early in the quarter, we felt the absence of fresh fashion on our floors, and at the end of the quarter our customers missed the deep markdowns that would’ve been taken in prior years, but hadn’t yet been taken this year because the shipments had just arrived,” she said.
Hoguet also talked about possible international expansion. Macy’s last year announced plans to open its first store outside the U.S., in Abu Dhabi, by 2018.
“There are numerous third parties approaching us about potential partnerships overseas, but we aren’t far enough along in our work to discuss these yet,” she said. “We are excited, as you might imagine, to further build on the strength of our Macy’s and Bloomingdale’s brands in other key countries and markets.”