Macy’s (M) sees Q1 loss of up to $1.1 billion

Macy’s said Thursday it expects first-quarter sales to fall by as much as 45{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, and it could report a loss of more than $1 billion, as the department store operator was forced to shut stores amid the Covid-19 crisis. 

Its shares were recently falling about 1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in premarket trading on the news. 

Macy’s said it expects to report an operating loss of between $905 million and $1.11 billion, compared with net income of $203 million a year ago. And it has forecast first-quarter sales to be in the range of $3 billion to $3.03 billion, down from $5.50 billion a year ago. 

“We expect business to recover gradually,” CEO Jeff Gennette said in a statement, as part of Macy’s releasing the preliminary financial results. 

The department store chain is expected to report fiscal first-quarter earnings on July 1. 

Macy’s stores were temporarily shut during the coronavirus pandemic on March 18, and are just beginning to reopen across the U.S., in states including South Carolina and Georgia. 

As of this week, Macy’s said roughly 190 of its namesake department stores and Bloomingdale’s shops have fully reopened. The company said another 80 Macy’s stores will be open for the upcoming Memorial Day weekend. It said it expects to have most of its locations open again by late June. 

“With two weeks of results from reopened stores, customer demand is moderately higher than we anticipated,” Gennette said. 

He added that the company saw a “steady uptick” in online sales during April, but that “only partially offset the loss of sales from the stores.” 

Meantime, Macy’s has been well into the financing process to raise debt, to come up with additional liquidity to weather this crisis. 

“We notified our banking partners early on of our plans to access additional financing, and this process is on track,” Gennette said Thursday. “We are confident we will obtain this financing before it is needed, allowing us to improve our financial flexibility.” 

The company is estimating it will end the first quarter with $1.52 billion in cash on hand, compared with $737 million a year ago. It expects the total debt on its balance sheet to be $5.66 billion, compared with $4.72 billion a year ago. 

The company said in an investor presentation it expects to have “sufficient liquidity” to execute its 2020 priorities. 

Macy’s has also appointed Felicia Williams, who currently serves as senior vice president, controller and enterprise risk officer, as interim CFO, effective May 31. As the company previously announced, current CFO Paula Price is set to depart at the end of this month. 

Macy’s shares as of Wednesday’s market close are down more than 70{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year. The company has a market cap of $1.6 billion. 

Read the full press release from Macy’s here.