Navigating through a “volatile” 2022, Macy’s Inc. reported fourth-quarter top and bottom-line declines compared to last year, but the figures beat Wall Street estimates, sparking a pre-market lift in the share price.

In addition, Macy’s most recent top and bottom line figures exceeded the 2019 pre-pandemic period.

Macy’s shares were up 5 percent, or $1.02, to $21.45 around 8 a.m. Thursday in pre-market trading.

Net income dropped to $508 million, or $1.83 a diluted share, from $742 million, or $2.44 a share in the 2021 quarter. Diluted earnings per share were $1.09 in the fourth quarter of 2019.

Net sales were down 4.6 percent to $8.3 billion versus $8.67 billion in he fourth quarter of 2021, and were down 0.9 percent versus the fourth quarter of 2019. Comparable sales were down 2.7 percent compared to last year’s quarter, but up 3.3 percent compared to the fourth quarter of 2019.

Brick-and-mortar sales decreased 2 percent versus the fourth quarter of 2021, and were down 11 percent versus the fourth quarter of 2019. The comparison to 2019 is impacted by store closures, including approximately 80 Macy’s full-line stores.

Digital sales decreased 9 percent versus the fourth quarter of 2021, but were up 24 percent versus the fourth quarter of 2019.

Macy’s comparable sales were down 3.3 percent from the prior year, reflecting the impacts of macroeconomic pressures on the consumer in conjunction with a lack of government stimulus benefits and a heightened competitive retail environment driven by industry-wide inventory surpluses. Sales were strong in gifting and occasion-based categories, including beauty, men’s tailored apparel, dresses and shoes, while sales in active, casual and soft home declined versus the prior year.

Bloomingdale’s comparable sales were up 0.6 percent. Beauty, women’s and men’s apparel in both contemporary and dressy performed well, partially offset by weakness in handbags and textiles.

Bluemercury comparable sales were up 7.2 percent. Results were driven by strength in skin care and makeup, strategic partnerships and its new initiative The Cache, an incubator platform that curates emerging, cutting-edge brands.

Gross margin for the quarter was 34.1 percent, down from 36.5 percent in the fourth quarter of 2021 largely due to planned markdowns and promotions, which were higher relative to last year, when inventory constraints in the industry led to low promotional levels and robust full-price sell-throughs.

“We successfully navigated 2022 from a position of financial and operational strength. Despite an increasingly volatile macroeconomic climate, through the ongoing execution of our Polaris strategy, we remained agile, pivoted to meet customer demand and elevated our approach to inventory management,” said Jeff Gennette, chairman and chief executive officer of Macy’s Inc.

“In the fourth quarter, we benefited from our disciplined inventory approach and compelling gift-giving strategy, which allowed us to provide fresh fashion and style at great values for all our customers. We were competitive but measured in our promotions, took strategic markdowns and intentionally did not chase unprofitable sales. As we look to 2023 and beyond, we believe our five growth vectors which include our private brands reimagination, off-mall expansion, online marketplace, luxury brands acceleration and personalized offers and communication will further solidify our modern department store positioning.”

Added Adrian Mitchell, chief financial officer, “We have built a solid foundation for long-term, profitable growth through enterprise-wide investments in our supply chain, data and analytics, pricing science, digital and technology which have enabled our operations and talented teams to become more efficient and flexible. Looking ahead, we will continue to take a balanced approach to expense management and capital allocation. With an ongoing focus on maintaining our financial health and strong balance sheet, we will make disciplined investments to drive growth while returning capital to shareholders.”

For all of 2022:

Net sales of $24.4 billion were down 0.1 percent versus 2021 and down 0.5 percent versus 2019. Digital sales decreased 6 percent versus 2021; up 31 percent versus 2019. Brick-and-mortar sales increased 3 percent versus 2021; down 11 percent versus 2019.

Comparable sales up 0.3 percent on an owned basis and up 0.6 percent on an owned-plus-licensed basis versus 2021; up 3.5 percent and up 3.7 percent, respectively, versus 2019. 

Macy’s forecasts that in 2023, net sales will be down 1 to 3 percent from 2022, to $23.7 billion to $24.2 billion. Earnings per share are seen at $3.67 to $4.11.

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