Macy’s has cash cushion.
Wednesday, February 25th, 2009There was good news from Macy’s though it was tempered by the realism of the marketplace. For the quarter ending Jan. 31, it earned $310 million, down from $750 million from the year prior. Same store sales were down 7 percent.
Sales for the year were down 5.4 percent: $24.89 billion versus $26.31 billion. For this year, Macy’s expects same store sales to drop between 6 and 8 percent. As long as Macy’s remains financially healthy, it will weather the storm and find a right size that reflects the business and retail environment.
Terry Lundgren, Macy’s CEO, said Macy’s will conserve cash. Buying time is important during times of economic duress, especially since there is no indication how far this recession will go.
With so much bad news and fear-mongering in the media, retailers are having a difficult time to find the right merchandise and prices for chastened consumers. The very nature of dressing for success, which has been the measure of consumers’ personal worth, has been tossed aside. People don’t want to stand out or look conspicuous.
In the early 1980s, I was in London consulting to an investment bank. An English banker said that the threadbare era following World War II had come to an end. What struck me at the time was that the war ended more than thirty years earlier.
Between the hard times following World War II and the early eighties, bankers told me even if one had money, one didn’t want to show it. Class warfare, financial hardships and other bad tidings restricted showing wealth or affluence. Gray stayed in as a fashion statement as did mended tweed jackets with elbow patches.