Macy's said Tuesday it is regaining customers at reopened stores much quicker than it expected, but that its recovery will be "gradual" from here.
During a virtual fireside chat with Cowen & Co. analyst Oliver Chen, Macy's Chief Financial Officer Felicia Williams said the company does not expect sales trends to normalize until 2021 or possibly 2022.
Macy's shares were recently down more than 5%, having skyrocketed more than 12% in premarket trading, on the heels of the company announcing Monday evening it had secured fresh financing.
With the retailer's stores forced shut for much of its fiscal first quarter due to the coronavirus pandemic, sales are expected to fall 45% to $3.02 billion from $5.5 billion a year ago, the company said Tuesday morning, as it released its preliminary financial results.
It is also forecasting a quarterly net loss of $652 million, or $2.10 per share, for the period ended May 2, compared with net earnings of $136 million, or 44 cents a share, in the prior year. Excluding one-time items, the company expects to lose $2.03 per share on an adjusted basis.
Macy's said its gross margins are, meantime, expected to take more of a hit during the second quarter, before trends reverse.
As of June 1, Macy's said it had roughly 450 locations were back up and running. This week, stores across New York City, including its flagship Bloomingdale's shop, are reopening to shoppers for curbside pickup.
"Our reopened stores are performing better than anticipated," Chief Executive Jeff Gennette said in a statement.
Later Tuesday, during the discussion with Chen, Gennette said he is confident people will get back to shopping for dressier apparel, despite many becoming accustomed to living in workout clothes during the pandemic.
"I do believe people are going to go back to weddings," he remarked.
Macy's is not planning for a surge during the holidays, however. Fourth-quarter performance will be similar to the third quarter this year, according to Gennette.
The company said Monday it raised roughly $4.5 billion in new financing to help it weather the Covid-19 crisis. Macy's said it now expects to have "sufficient liquidity" to address the needs of its business during this time of upheaval, including buying new inventory and repaying upcoming debt maturities.
CNBC had reported in April that Macy's was considering the financing as a way to relieve the pressure from having all of its stores temporarily shut.
Gennette told analysts Tuesday that the company's quality real estate portfolio, including some of its distribution centers, helped it garner more confidence with its banks do this deal.
"We were very pleased with how our bankers basically ... jumped on that, and our banks basically doubled their position, in many cases," he said.
According to CEO Gennette, the company anticipates ending the second quarter with a lean inventory position, setting it up well for the latter half of 2020.
It is expecting first-quarter inventories to amount to $4.92 billion, down from $5.5 billion a year ago.
"The holiday season will be crucial, and the team is working now to get the right merchandise and assortment in place," he commented.
Macy's is set to report its first-quarter earnings on July 1.
As of Monday's market close, Macy's shares are down about 43% this year. The company has a market cap of $3 billion.