Retail

Macy’s Takes $3.1B Charge As Pandemic Dampens Outlook

Macy's Recognizes $3.1B Charge As Pandemic Reshapes Outlook

Macy’s Inc. recognized a $3.1 billion non-cash goodwill charge before tax, as the retailer’s long-haul forecast and market capitalization shifted, mainly due to the coronavirus health crisis. The department store retailer also recognized an $80 million long-lived asset impairment charge, according to a first-quarter financial results announcement.

Macy’s said it had net sales of just over $3 billion, as reported in the past, and adjusted diluted loss per share of $2.03. Almost all of its stores have opened again, including locations in significant metropolitan areas.

The retailer said that stores kept performing “ahead of expectations” up to May and June, and that its digital business sales stayed “strong across geographies.” It also noted that it continues to forecast a “gradual sales recovery.”

Macy’s Chairman and Chief Executive Officer Jeff Gennette said in the statement, “The first quarter of 2020 was challenging for the country, the industry and Macy’s, Inc. While our stores are reopened, we expect that the COVID-19 pandemic will continue to impact the country for the remainder of the year.”

Gennette also said the company does not expect another complete closure, but is “staying flexible” and is “prepared to address increases in cases on a regional level.”

The company said that asset sale gains for Q1 2020 came out to $16 million before tax, or $12 million after tax. In Q1 of last year, asset sale gains came out to $43 million before tax or $31 million after tax. It also noted that it withdrew its 2020 earnings and sales guidance in the past and “is not currently providing an updated outlook.”

In May, Macy’s announced the offering of senior secured notes of $1.1 billion with a maturity of 2025 to assist in repaying borrowings under its existing $1.5 billion credit facility. The retailer said a collection of real estate assets, including three iconic properties, would secure the notes.

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