Realism from a major US department store chain about when life for it (and most retailers) will be back to pre-COVID-19 ’normal’.
In an interview after releasing the barebones of its March quarter figures, Macy’s warned that its business was not likely to return to normal until late 2021.
That was despite seeing better-than-expected sales from stores reopening after COVID-19 lockdowns were lifted across the United States.
The retail sector has been among the hardest hit by the economic effects of the health crisis, with major chains J Crew, J.C. Penney, and Neiman Marcus Group filing for bankruptcy in May. The latter two are department stores and competitors to Macy’s.
Macy’s reported nearly $US1 billion in operating losses in its first quarter and there’s more to come with the chain’s management looking at store closures to cut costs.
Macy’s has 775 stores across the US (it owns Bloomingdale’s as well) and as of June 1, 450 of those had re-opened. All will be offering curbside puck up by this Friday.
Macy’s said its preliminary sales fell over 45% to $US3.02 billion in the quarter ended May 2, in line with the company’s prior forecast.
“We do not see a return to normalised trends until well into 2021 and possibly not until 2022,” interim Chief Financial Officer Felicia Williams said in an interview at a retail investors conference in New York on Tuesday.
The retailer has so far raised $US4.5 billion to navigate through the fallout from the pandemic, and the CEO warned that profit margins in the current quarter will be under more pressure than the first as it slashes prices to move unwanted stock.
Macy’s reported a preliminary adjusted net loss of $US630 million, compared to a profit of $US137 million a year earlier.
But the loss will be much larger when the full quarter’s results are released on July 1 because Macy’s pointed out “These results do not include the non-cash impact of goodwill and long-lived asset impairment charges, which are expected to have a material impact on the company’s reported results.”
The Spanish-owned Zara is one of the success stories of global retailing as its well designed, quickly made and expertly sold range of mostly women’s and homewares and it has taken market share from rivals the world over including Australia.
But even this successful giant, known as Inditex (or Industria de Diseno Textil SA), known as Inditex, has not been able to escape being ravaged by the COVID-19 pandemic and lockdowns, especially in its home country and the rest of Europe.
Zara Wednesday reported a first-quarter loss after a 40% slump in sales.
The Spanish fashion giant reported a net loss of 409 million euros ($US462.5 million) for the quarter to April 30 compared with a net profit of 736 euros million in the same quarter of 2019.
Analysts had forecast a 161 million euro net trading loss, excluding write downs.
Inditex said the loss was exacerbated by a 308 euros million write off the cost of its store optimisation (revamp) campaign that has been stalled by the impact of the pandemic.
Sales fell 44% int he quarter to 3.3 billion euros from 5.93 billion euros.
Inditex said the coronavirus lockdowns forced it to close the majority of its stores around the world, hitting its first-quarter results hard, but that trends were improving in May as most markets began to gradually reopen.
Store and online sales fell 51% in local currencies in May.
The company, which also owns Oysho, Massimo Dutti and Pull&Bear, separately announced Wednesday that it would pay a dividend of 35 euro cents for its 2019 financial year.
It had held out on declaring a dividend earlier this year due to the uncertainty caused by the pandemic.
