Did Christmas Crush Macy’s?

People abandoned shopping in stores this holiday season, a trend that accelerated as the season rushed toward Christmas. Few retailers needed brick-and-mortar sales more than retailer Macy’s Inc. (NYSE: M), which already has taken a terrible beating this year.

Sensormatic Solutions, a retail research firm, reports that foot traffic to retailers dropped almost 40% last weekend. For the six-week holiday season, it is off about 35%. Expectations put the figure at about 23%, which means the drop from expectations is substantial.

Macy’s has sharply slimmed down its store footprint. What is left are 544 Macy’s stores, 34 Bloomingdales, 19 Bloomingdale Outlets and 166 Bluemercury locations. In the third quarter, revenue from these stores plunged from $5.2 billion last year. Macy’s lost $0.29 a share, compared with $0.01 profit a year ago. Comparable store sales dropped over 20%. “Digital sales grew 27% over third quarter 2019. Digital sales penetrated at 38% of total owned comparable sales,” Macy’s said. It is not clear what the second portion of that statement means.

Jeff Gennette, Macy’s board chair and chief executive officer, said “Macy’s, Inc. third quarter results reflect solid performance across all three brands – Macy’s, Bloomingdale’s and Bluemercury. Our results were driven by disciplined cost management, strong execution by our colleagues and an early start to the holiday shopping season.” Based on the numbers, that was not the case at all.

The question is whether Macy’s store traffic matches the industry trend. Did it dodge the figures posted by Sensormatic Solutions by a large, positive margin? Or was its holiday traffic low enough that its former liquidity problems returned?

Macy’s started to run out of time as the pandemic hit the United States hard in the spring. It strengthened its balance sheet. However, holiday sales needed to be better than modest for Macy’s to recover. That may not have happened at all.

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