Macy's Exceeds Cost-Savings Expectations and Focuses on Operational Efficiency
2023-09-08
Macy's, a leading retail company, recently held its quarterly earnings call to provide an update on its performance during the third quarter. The meeting was attended by key executives and analysts, including Pam Quintiliano - Vice President, Investor Relations; Jeff Gennette - Chairman and Chief Executive Officer; Tony Spring - President and Incoming Chief Executive Officer; Adrian Mitchell - Chief Financial Officer; and several analysts from prominent firms.
One of the most interesting topics discussed during the meeting was Macy's cost-savings programs. Adrian Mitchell, Macy's CFO, revealed that the company has exceeded its expected savings and is currently benefiting from ongoing initiatives. Macy's has achieved $200 million in savings this year, encompassing both gross margin and SG&A expenses. Mitchell emphasized the reality of these initiatives and the company's active pursuit of expense opportunities. However, specific details on how these savings will materialize in 2024 were not provided, indicating Macy's focus on optimizing its cost structure and driving operational efficiency.
The meeting also highlighted the key drivers of Macy's business, including customer experience, profitable growth, operating disciplines, five growth factors, credit card revenues, shortage, real estate challenges, and expense management initiatives. The company emphasized the importance of delivering a positive experience for customers and acknowledged the need to achieve profitable growth. They also discussed their aspiration for low double-digit EBITDA margins in the longer term, although certain factors could make this goal more challenging in the near term. Additionally, Macy's mentioned experiencing higher age balances across all delinquency in credit card revenues.
In terms of outlook, Macy's expressed cautious optimism for the quarter and year ahead. They expect end-of-quarter inventories to be down compared to last year and anticipate achieving low single-digit sales growth beginning next year. The company believes that improved underlying fundamentals and the early contributions of their growth vectors will offset ongoing macro pressures. However, they acknowledged that external factors, such as recent trends in credit card revenues and potential regulatory changes, may pose challenges. Achieving a low double-digit EBITDA margin in 2024 could be more challenging if these factors persist. Nevertheless, Macy's is actively working to offset headwinds and prioritize growth, expressing confidence in their leadership team's ability to lead the company to sustainable long-term profitable growth.
Overall, Macy's earnings call provided valuable insights into the company's performance and strategic initiatives. The exceeding of cost-savings expectations and the focus on optimizing the cost structure demonstrate Macy's commitment to operational efficiency. The emphasis on customer experience and profitable growth highlights their dedication to delivering value to their customers and shareholders. As Macy's navigates through ongoing challenges and external factors, it remains focused on driving sustainable long-term growth and maintaining its position as a leading retail company.