Struggling retailer Macy’s warned on Thursday (May 21) that it expects as much as a $1.11 billion first-quarter operating loss, but said it was “on track” to access additional financing that presumably could help the chain avoid bankruptcy.
“This is a challenging time for the country, for retail and for Macy’s, Inc. COVID-19 has impacted the lives of many of our colleagues and customers, and health and safety remain our top priority,” Macy’s Chairman and Chief Executive Officer Jeff Gennette said in warning of the loss. “We closed all of our stores — Macy’s, Bloomingdale’s and Bluemercury — on March 18, which had a significant impact on our first quarter results.”
He said the company expects operating red ink to total between $905 million and $1.11 billion for the first quarter, compared to operating income of $203 million a year earlier. Macy’s also predicts that net sales will plunge to between $3 billion and $3.03 billion for the period, down from $5.5 billion in first-quarter 2019.
Gennette didn’t specifically address speculation rising that Macy’s could declare Chapter 11 bankruptcy, but did say the company “notified our banking partners early on of our plans to access additional financing, and this process is on track. We are confident we will obtain this financing before it is needed, allowing us to improve our financial flexibility. We are taking the right steps to ensure that Macy’s, Inc. will emerge on the other side of this crisis a strong, resilient company and ready to serve our customers.”
He also reported “a steady uptick in our digital business in April, which was encouraging, but only partially offset the loss of sales from the stores. The digital performance was driven by strong execution and enhanced fulfillment options, including curbside pickup where allowed.”
The CEO noted that Macy’s started to open its stores again on May 4, with roughly 190 Macy’s and Bloomingdale’s stores open in their full formats as of this week. Additionally, the company foresees an additional 80 Macy’s stores to open for Memorial Day weekend.
“The first quarter of 2020 was certainly not what anybody expected, but I’m really proud of how the team has responded,” Gennette said in a subsequent call with analysts. “I feel good about the steps we are taking to ensure our company emerges on the other side of this pandemic.”