Macy's CEO sees tariff hit on furniture business
By Melissa Fares and Aishwarya Venugopal
(Reuters) – Macy's Inc. said on Wednesday that the latest tariffs on Chinese imports from Washington hit the store operator's furniture business and executives warn that additional trading fees will leave clothing and accessories categories. vulnerable.
"If the possible fourth transaction of tariffs is placed on all Chinese imports, it will affect both our private and our national brands," said CEO Jeff Gennette to investors on a earnings call, arguing that the Company would do what could minimize the impact on customers.
Review said that escalation of tit-to-tat tariffs was not included in the company's annual view.
The CEO said that the company had strategies in place to compensate for the tax impact on Macy's furniture business and that the company has "worked hard … for several months and really for a couple of years" to move production n from China as it sources one. majority of its goods from manufacturers located outside the United States, mainly in Asia.
Washington dramatically increased its 10-month trade war with Beijing on Friday by raising $ 200 billion of Chinese goods in the midst of trade negotiations, and US President Donald Trump has threatened new tariffs on all remaining imports from China, sending global financial markets for a tailspin. China retaliated on Monday, but on a smaller scale.
Q1 RESULTS TOP EXPECTATIONS
Macy's peaked Wall Street estimates for quarterly same store sales and profits benefiting from increased online sales and higher demand for goods sold at their off-price stores.
Macy's shares, which have lost far more than a quarter of the value this year, were up about 1% at $ 22.04 in morning trading.
Like their peers, the Cincinnati, Ohio-based department store chain, which has closed more than 100 stores since 2015 and cut thousands of jobs while the mall shrank, delicious in recent years, as it struggled to adapt to a fiercely competitive retail landscape where customers buy multiple items online in places like Amazon.com Inc.
The 160-year-old dealer has earned money to build up their private label clothing, as well as expand their off-price venture, Backstage, by adding 45 more stores this year.
The company said in February that it would also invest in categories where Macy has a strong market positioning such as dresses, jewelry, women's shoes and beauty products.
Implement the aforementioned sales pattern for brick and mortar sequentially improved in the first quarter, aided by its off-price backstage business. The dealer said it saw double-digit growth in its digital business, and that the mobile continues to be Macy's fastest growing sales growth channel.
Sales in Macy's stores open more than 12 months, including sales in warehouses licensed to third parties, rose for the sixth straight quarter. They increased by 0.7%, above the average analyst estimate of a 0.3% increase, according to research firm Consensus Metrix.
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Gross margin in the quarter fell to 38.2 % from 39%, while spring stock was heavier as a delayed start to the season, customers spent more on discounted winter clothes. The company said it expects to see some gross margin pressure in the second quarter as it continues to remove excess spring products.
Macy's last quarter announced a plan focused on cost reductions for 2019 to boost decision making and result in an annual $ 100 million saving.
The company earned $ 136 million, or 44 cents per share, in the first quarter ended May 4, compared to $ 139 million, or 45 cents per share, a year ago. It exceeded the average analyst's estimate of 33 cents.
Net sales fell to $ 5.50 billion, roughly in line with analysts' expectations, according to IBIN data from Refinitiv.
"With complicated results we get better than feared, I expect a modest relief coming out of Macy today but will not chase the stock," said analyst Chuck Grom, Gordon Haskett, in a note.
The company also repeated its earlier published economic forecast for the year
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