Macy’s Inc.’s (M’s) Q4 and FY19 results marked a continued slide for the brick-and-mortar retailer amidst an attempted turnaround.
FY sales, operating income, and cashflow all experienced a y-o-y contraction, while digital sales were up in 4Q and FY19. Digital currently represents approximately 25 percent of M’s net sales. Mobile sales made up approximately 55 percent of total digital sales in Q4 and FY19.
But, declining sales and shrinking margins overall indicate that digital sales growth alone isn’t yet enough to turn things around for the company.
M’s poor cyber governance continues to contribute to its underperformance vis-a-vis its retail peers and the broader market, and it is also reflected in its share price slide.
While recognizing the importance of M’s digital transformation plans to the company’s turnaround efforts and future prospects generally, decelerating sales growth and reduced cashflows will only further constrain the company’s efforts to sufficiently invest in cybersecurity. This increases the probability of the company experiencing a costly business disruption in its increasingly important e-commerce business, which would lead to further erosion of shareholder value.