Saturday 21st of November 2020 at 10:30 am
Macy's CEO Jeff Gennette pretty much says his retailer is just as essential as grocery stores during COVID-19.
Best not tell Macy’s (M) CEO Jeff Gennette his 700-plus clothing, accessories and perfume stores are any less important during COVID-19 than a Walmart selling essential milk, bread, hand sanitizer and Clorox disinfecting wipes to quarantined households.
He may not take too kindly to the mere suggestion.
“We definitely believe that we can operate through COVID and keep every one of our stores open. And I think we've clearly shown that we know how to keep our colleagues and our customers safe,” Gennette told Wall Street analysts on a Thursday earnings call. “And so that's what we're clearly pushing through the NRF [National Retail Federation] and RILA [Retail Industry Leaders Association] working with all of our municipal leaders as well, as governors. We don't believe that designation of essential and non-essential should play in retail, we believe you need to have a safe environment or not, we should be held accountable to health and safety standards. And we stand by those. And based on how we performed and based on how our customers have that signal to us. We're doing a great job of that.”
Among the many retailers labeled as non-essential by lawmakers, Macy’s stores were shuttered from March 18 through May 4 as states mandated shelter-in-place measures at the height of the pandemic this year. Macy’s stores began to reopen in early May, with most being back in operation by the beginning of July. But with coronavirus infections back on the rise nationwide and states implementing new restrictions on indoor dining, schools and general activity, all eyes are on malls and retail stores such as Macy’s and if they will be forced to shut down again.
Gennette told analysts he doesn’t anticipate any new store closures.
“We've modeled closures, don't anticipate them. But if they were to happen, we'll be ready. And so it's heartening to hear about vaccines. But when you look at the surging that's going on right now in the country, we're mindful of that,” Gennette added.
To be sure, Macy’s being forced to close any number of stores (or the entire chain again) during the crucial holiday selling season because of the pandemic would hammer an already wounded business.
Macy’s said Thursday that same-store sales declined a jarring 20.2%. However, that masked severe weakness at the store level as shoppers stayed away amid fear of catching the deadly disease. In a slide deck posted on its investor relations page, Macy’s noted store sales plunged 36%. The company lost $60 million on an adjusted net income basis. Year-to-date Macy’s has lost $941 million in adjusted net income.
“We remain Neutral rated as we consider the exposure of Macy's largely mall-based fleet, which we expect to continue to face traffic challenges as tourism is down and COVID cases are rising. Although Macy's has locations in top-rated malls across the country, it’s unclear whether foot traffic in malls will rebound and at what pace,” Guggenheim retail analyst Robert Drbul wrote in a note to clients.
Macy’s shares are down 47% year to date.
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