Macy’s Inc (NYSE: M) stock lost over 0.1% on 2nd September, 2020 (as of 1:16 pm GMT-4; Source: Google finance) post lower than expected second quarter of 2020 performance. The firm’s Comparable sales fell 34.7% on an owned basis and lost 35.1% on an owned plus licensed basis. The firm reported a Diluted loss per share of $(1.39) and an Adjusted diluted loss per share of $(0.81).
But the group sees this as faster than expected store recovery and better than expected growth of digital business. Digital sales were solid rising 53% on a year over year basis. Digital sales penetrated at 54% of total owned comparable sales. The firm delivered a gross margin of 23.6%, which is a rise of over 650 basis points from first quarter 2020 on the back of better retail margins from mix and better sell through of clearance merchandise. Macys also withdrew its 2020 sales and earnings guidance and is not offering an updated outlook due to the ongoing uncertainty as a result of the COVID-19 pandemic.
Inventory fell 29% from a year ago, allowing the company to exit second quarter in a clean inventory position. The firm also controlled its expenses with Selling, general and administrative expense, losing $779 million to $1.4 billion as compared to the prior corresponding period. The firm’s efficient expense management related with the swift actions undertaken in response to the COVID-19 pandemic as well as execution against Polaris strategy. SG&A expense rate of 39.2%, was relatively consistent with prior year.
The firm had over $1.4 billion in cash and over $3 billion of untapped capacity in the company’s new asset-based credit facility. They continue to approach the back half of the year conservatively. Macys is investing in fashion, digital and omnichannel, work with agility, and galvanize the resources of the company to serve their customers efficiently.