Reopened Macy's Stores Exceed Expectations, But Chain Still Expects Big 1Q Losses

Macy’s Inc. reported that its reopened stores are “performing better than anticipated” in its preliminary first-quarter 2020 financial results. The department store retailer said it had roughly 450 retail locations reopened by June 1, with many opened in their complete format, and that curbside pickup was “performing well,” according to an announcement.

“The COVID-19 pandemic significantly impacted our first-quarter sales and earnings results, but I am proud of the way our team navigated this difficult period and maintained the business while our stores were closed,” Jeff Gennette, chairman and chief executive officer, said in the announcement. “Our strong digital business sales trend continued throughout May, and it is encouraging to see that as we reopen a store, the digital business in that geography continues to be strong."

Macy’s reported preliminary net sales of $3.02 billion for the first quarter of 2020 compared to $5.50 billion for the first quarter of 2019. It also forecast a preliminary adjusted diluted loss per share of $2.03 for the first quarter compared to adjusted diluted earnings per share of 44 cents in first-quarter 2019.

The news comes as Macy’s Inc. said in an announcement that it closed on roughly $4.5 billion in new financing, including its previously announced $1.3 billion of 8.375 percent senior secured notes, as well as a new $3.15 billion asset-based credit agreement. Additionally, the retailer said it has “amended and substantially reduced the credit commitments of its existing $1.5 billion unsecured credit agreement.”

Macy’s said it plans to use funds from the notes offering, in addition to cash on hand, to pay back outstanding borrowings with its current $1.5 billion unsecured credit agreement.

Gennette said in the announcement, “Together, the notes offering and asset-based credit agreement provide Macy’s, Inc. with approximately $4.5 billion of borrowings and commitments, giving us sufficient flexibility and liquidity to navigate our current environment and fund our business for the foreseeable future.”

In May, Macy’s cautioned that it foresaw as much as a $1.11 billion first-quarter operating loss, but noted that it was “on track” to access further financing.