Macy’s Inc. has a long-term view to reverse declines of 2022 and 2023 into gains in 2024.

“Our five vectors for growth will reach a rate of maturation that may start to offer us growth, help us take market share and surmount macroeconomic aspects,” chairman and chief executive officer Jeff Gennette told WWD, referring to Macy’s private brands “reimagination,” off-mall and online marketplace expansion, a luxury acceleration and personalization initiatives in offerings and communications with customers.

Interviewed Thursday, just after Macy’s Inc. reported top- and bottom-line declines for the fourth-quarter and projected declines for 2023, Gennette told WWD: “The luxurious consumer is healthy. Luxury is a growing pie and we are able to get a greater share of the luxurious pie.”

The play for greater luxury business is occurring at Bloomingdale’s, in all categories where luxury is sold at the shop, in addition to at Bluemercury and inside Macy’s fragrance floors.

Gennette disclosed to WWD that for the upcoming Macy’s Herald Square Flower Show, launching March 26, Dior will take greater than 10,000 square feet on the mezzanine level and windows for “an immersive” Parfums Christian Dior fragrance experience being designed by Dior and called “Made With Love.” “Dior is such a hot brand,” Gennette said, and essential for Macy’s Inc.’s luxury plans.

Macy’s Inc. was capable of navigate through a “volatile” 2022, reporting fourth-quarter top- and bottom-line declines in comparison with last yr, though the figures beat Wall Street estimates, sparking an 11 percent spike within the stock price to $22.68 by midday. As well as, Macy’s most up-to-date top- and bottom-line figures compared more favorably to the 2019 pre-pandemic period.

Net income within the quarter dropped to $508 million, or $1.83 a diluted share, from $742 million, or $2.44 a share within the 2021 quarter. Diluted earnings per share were $1.09 within the fourth quarter of 2019.

Net sales were down 4.6 percent to $8.3 billion versus $8.67 billion within the fourth quarter of 2021, and were down 0.9 percent from the fourth quarter of 2019. Comparable sales were down 2.7 percent in comparison with last yr’s quarter, but up 3.3 percent in comparison with the fourth quarter of 2019.

It needs to be noted that Walmart and Goal, which unlike Macy’s sell groceries and lower-priced merchandise and groceries, reported sales gains for the fourth quarter, as consumers shift some dollars more to non-discretionary items.

RELATED: Goal Tops Q4 Sales Estimates Despite Weakness in Discretionary

Gennette said through the last holiday season consumers pulled back on self-purchasing but there have been spikes within the business during key days, similar to Black Friday and Cyber Monday, in addition to through the week before Christmas.

Macy’s forecasts that in 2023, net sales will probably be down 1 to three percent from 2022, to $23.7 billion to $24.2 billion, but are expected to show positive in 2024, as Gennette said. Easier comparisons to 2023 should help paint a brighter picture in 2024.

Earnings per share this yr are seen at $3.67 to $4.11.

A part of Gennette’s upbeat outlook stems from what’s been a cultural shift in Macy’s buying to a “net cost model” that began three years ago. It involves purchasing merchandise upfront at lower costs and reducing markdown allowances. “The buying is more conservative and there’s built-in liquidity to reply quicker” to trends, categories and types that customers are shopping. “We will reply to what’s trending inside per week,” Gennette said.

“It was an adjustment and I’m not saying it hasn’t happened without some pain. But we now have deep relationships with vendors. We would like to construct [our business] together with them. Markdown allowances have been dramatically reduced as we get reductions on the upfront costs. There are still some end-of-season reconciliations.”

On the brick-and-mortar front, Gennette said five more department store closings are planned for this yr. Macy’s previously disclosed a plan to shut 125 shops, of which 80 already closed. Timing on the remaining 40 locations, which Gennette said were all money positive, is to be determined and to a big extent will probably be based on where additional offmall formats — Bloomie’s and Market by Macy’s specialty stores — can fill in.

“The department store portfolio is in pretty good condition,” Gennette said, while adding, “We’ve got big ambitions to have an off-mall fleet.”

Brick-and-mortar sales decreased 2 percent last quarter versus the fourth quarter of 2021, and were down 11 percent versus the fourth quarter of 2019. The comparison to 2019 is impacted by store closures, including the 80 Macy’s full-line stores.

Digital sales decreased 9 percent versus the fourth quarter of 2021, but were up 24 percent versus the fourth quarter of 2019.

By division, Macy’s comparable sales were down 3.3 percent from the prior yr, reflecting macroeconomic pressures on consumers at the side of a scarcity of presidency stimulus advantages and a heightened competitive retail environment driven by industrywide inventory surpluses, the corporate indicated. Sales were strong in gifting and occasion-based categories, including beauty, men’s tailored apparel, dresses and shoes, while sales in lively, casual and soft home declined versus the prior yr.

Bloomingdale’s comparable sales were up 0.6 percent. Beauty, women’s and men’s apparel in each contemporary and dressy performed well, partially offset by weakness in handbags and textiles.

Bluemercury comparable sales were up 7.2 percent. Results were driven by strength in skincare and makeup, strategic partnerships, and its recent initiative The Cache, an incubator platform that curates emerging, cutting-edge brands.

Gross margin for the quarter was 34.1 percent, down from 36.5 percent within the fourth quarter of 2021 largely on account of planned markdowns and promotions, which were higher relative to 2021 when inventory constraints within the industry led to low promotional levels and robust full-price sell-throughs.

“We successfully navigated 2022 from a position of economic and operational strength. Despite an increasingly volatile macroeconomic climate, through the continuing execution of our Polaris strategy, we remained agile, pivoted to fulfill customer demand and elevated our approach to inventory management,” Gennette said in his prepared statement.

“Within the fourth quarter, we benefited from our disciplined inventory approach and compelling gift-giving strategy, which allowed us to supply fresh fashion and elegance at great values for all our customers. We were competitive but measured in our promotions, took strategic markdowns and intentionally didn’t chase unprofitable sales. As we glance to 2023 and beyond, we consider our five growth vectors, which include our private brands reimagination, off-mall expansion, online marketplace, luxury brands acceleration and personalized offers and communication will further solidify our modern department store positioning.”

Added Adrian Mitchell, chief financial officer, “We’ve got built a solid foundation for long-term, profitable growth through enterprise-wide investments in our supply chain, data and analytics, pricing science, digital and technology which have enabled our operations and talented teams to turn into more efficient and versatile. Looking ahead, we’ll proceed to take a balanced approach to expense management and capital allocation. With an ongoing give attention to maintaining our financial health and robust balance sheet, we’ll make disciplined investments to drive growth while returning capital to shareholders.”

“Macy’s [fourth quarter], which was stronger than many mall-based peers, was supported by good execution and inventory control,” said David Silverman, senior director at Fitch Rankings. “Relatively low inventory levels allowed Macy’s to limit unplanned promotions despite some top-line softening. Macy’s inventory position also gave it capability to lean into popular styles and categories in-season, maximizing trend-informed sales opportunities. Macy’s, like its apparel and residential peers, does expect a softer selling environment to proceed through 2023, but efforts to constrain inventory and discretionary expenses should help it navigate through a choppy environment.”

A more critical view got here from Neil Saunder, managing director of GlobalData, who commented, “Although Macy’s results are removed from a disaster, they highlighted the growing pressure on the business as the buyer economy comes off its spending high.”

Saunder added that the sales and net income declines reflect lower productivity and better costs, which “act as a drag on the underside line and in some ways to be expected as Macy’s traded well (in 2021) so has some tough benchmarks to best. While Macy’s stays a comparatively stable business on a solid financial footing, the predominant concern is that after a pandemic-induced hurrah, it’s now reverting to its previous type of bumping along the underside.”

For all of 2022, Macy’s Inc.’s net sales of $24.4 billion were down 0.1 percent versus 2021 and down 0.5 percent versus 2019. Digital sales decreased 6 percent versus 2021, and rose 31 percent versus 2019.

Brick and mortar sales increased 3 percent versus 2021 and were down 11 percent versus 2019.

Comparable sales were up 0.6 percent versus 2021, and up 3.7 percent versus 2019.