Highlights from Macy's Q4 Earnings Conference Call
Below are some highlights from Macy's (NYSE: M) Q4 conference call.
- Sales in the fourth quarter were $9.202 billion, up 1.4 percent on a comparable basis and up 2.3 percent on a comparable basis together with sales in licensed departments.
- Total sales were down 1.6 percent in the quarter because we are comparing this year's 13-week quarter to last year's 14-week.
- We were pleased with our November/December sales, but in January our sales fell well short of what we had planned. As a result, we missed the sales guidance that we had provided at the start of the month. Clearly, much of this weakness resulted from the bitter cold temperatures and the frequent snow events in January, but we would not attribute all of the weakness to the weather.
- The strongest businesses in the quarter were Handbags; Cold Weather Apparel and Accessories; our older Millennial Apparel or Impulse area; Men's Dress Apparel and Shoes; Luggage; and Furniture and Mattresses.
- The weaker businesses in the quarter included Watches, Fragrances, Housewares and Tabletop.
- Rolling out buy-online pick-up in store to all stores during the spring season.
- The gross margin rate in the fourth quarter was 40.6 percent, flat with last year..
- We laid off approximately 1800 employees instead of the original estimate of 2500. And this will not impact the expectation of the $100 million in annual cost savings.
- In spring of 2014, we increased our dividend by 25 percent to $1.00 a year, and we also bought back $1.6 billion of stock during the year.
Looking to 2014, CFO, Karen M. Hoguet highlighted ten key planning assumptions.
- Expecting comparable sales including sales from licensed departments to grow slightly faster than comparable sales.
- Expect total sales growth to be approximately the same as comparable sales for the year.
- Sales plan assumes higher comparable gain in the second quarter than in the first.
- flat to slightly down gross margin rate.
- Credit expected to produce more EBIT than last year.
- Depreciation and amortization assumed to be slightly above 2013 at $1.040 billion.
- Interest tax expected to be approximately $390 million, assuming a 36.4 percent tax rate.
- Frozen pension plan will dramatically change retirement expense, assuming a decrease of approximately $150 million.
- $453 million of debt maturing in July, expected to be refinanced.
- Capital expenditures expected to be $1.050 billion.
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