At the end of the first quarter, Macy’s reported a weak set of earnings results that it said were hit by a “confluence” of factors, including bad winter weather, weak tourist spending and a labor dispute at West Coast ports that resulted in delays in getting merchandise to shelves.
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Profit in the three months through August 1 was 64 cents a share, the Cincinnati-based company said in a statement on Wednesday.
Alibaba’s shares have fallen some 17% since its IPO last year and were down Wednesday morning after releasing its quarterly results; the company also announced Wednesday a $4 billion, two-year share buyback. The company also unveiled on Wednesday a joint venture with China’s Fung Retailing Ltd.to begin selling merchandise on Alibaba Group Holding Ltd.’s Tmall Global platform later this year-Macy’s latest effort to jump-start sales growth.
The company also said it would sell a part of its Fulton Street retail store in Brooklyn to real estate company Tishman Speyer for $170 million. Analysts polled by Thomson Reuters had expected 76 cents a share in earnings. “Again, we have generated strong free cash flow of US $1.5 billion this quarter”. On an owned basis, comparable sales declined 2.1 percent. “Moreover, throughout the first half of the year, overall consumer demand has been restrained in numerous categories of merchandise we sell, and the strong U.S. dollar has led to significantly lower global tourist spending”.
Separately, Macy’s announced that it will “test” the Chinese e-commerce market in a joint venture that will place it on Tmall, Alibaba’s online marketplace.
During the quarter, Macy’s repurchased around 8.0 million shares of its common stock for a total of around $552 million.
The department store giant reported that sales were down 2.1 percent at stores open more than a year. “We expect an improvement in trend beginning in the second half of 2015 based on a range of promising new strategic initiatives, including those initially announced in January, which we believe will transform our company in the years ahead”, said Terry J. Lundgren, Macy’s chairman and chief executive officer. Alibaba announced Tuesday that it’s expanding its brick-and-mortar presence and logistics capabilities in China with a $4.6 billion investment in Chinese electronics retailer Suning. Macy’s will own 65 percent of the joint venture with Fung Retailing.
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Macy’s shares were trading at $68.20 before the bell.
