=Macy's (M) lowers FY17 EPS guidance

Macy's lowers FY17 EPS guidance; comps fell 2.1% in the months of November and December; announces restrucuring :

• Comparable sales on an owned plus licensed basis declined by 2.1% in the months of November and December 2016 combined, compared to the same period last year. On an owned basis, comparable sales declined by 2.7 percent in the combined November/December period.
• "While our sales trend is consistent with the lower end of our guidance, we had anticipated sales would be stronger. We believe that our performance during the holiday season reflects the broader challenges facing much of the retail industry. We are pleased with the performance of our digital business, with double-digit gains at both macys.com and bloomingdales.com; however, store sales continued to be impacted by changing customer behavior. Our apparel business, which includes women's, men's and children's, performed well, with particular strength in active and cold-weather merchandise. Sales were also strong in fine jewelry, as well as furniture and bedding, reflecting the success of our initiatives in those categories. However, ongoing weakness in handbags and watches negatively impacted our results."
• Macy's maintains its previously provided full-year sales guidance of a 2.5-3.0% decrease in comparable sales on an owned plus licensed basis, and expects to come in at the lower end of that guidance, with comparable sales on an owned basis to be ~50 basis points lower.
• Lowers FY17 adj. EPS to $2.95 to $3.10 (compared with previous guidance of $3.15 to $3.40) vs. $3.28 consensus.

Co announced a series of actions to streamline its store portfolio, intensify cost efficiency efforts and execute its real estate strategy. These actions bolster the company's strategy to further invest in omnichannel capabilities, improve customer experience and create shareholder value. The actions include:

• The closure of 68 stores and the reorganization of the field structure that supports the remaining stores, reinforcing the strategy of fewer stores with better customer experience. These store closures are part of the ~100 closings announced in August 2016.
• The significant restructuring of the Macy's, Inc. operations to focus resources on strategic priorities, improve organizational agility and reduce expense.
• The sale of properties consistent with the previously announced real estate strategy.

The actions announced today are estimated to generate annual expense savings of ~$550 million, beginning in 2017, enabling the company to invest an additional $250 million in growing the digital business, store-related growth strategies, Bluemercury, Macy's Backstage and China. These savings, combined with savings from initiatives implemented in early 2016, exceed the $500 million goal communicated in fall of 2015, one year earlier than expected.