Macy’s Posts $1.251-Billion Loss in ’92 as Revenue Falls
NEW YORK — R.H. Macy & Co. reported Friday a $1.251-billion loss and declining sales for its fiscal 1992 year, the year in which the famous department store company was forced into bankruptcy court by enormous debts and flagging sales.
Macy’s said the loss for the year ended Aug. 1 included $988 million in one-time expenses associated with its Chapter 11 bankruptcy filing last Jan. 27 and the subsequent closing of eight department stores and 62 specialty stores. Macy’s posted a $150-million loss a year earlier.
When one-time expenses were factored out, Macy’s was left with a $263-million operating loss for the year.
The company said sales for the year fell to $6.449 billion from $6.762 billion a year ago. Sales at stores open at least a year fell 3.7%.
Macy’s said sales fell because vendors reduced their shipments to Macy’s about the time the company filed for Chapter 11 in January.
However, the company said it has seen some improvement in recent sales trends. Macy’s executives and a lawyer representing some of the retailer’s creditors said they were cautiously optimistic.
It is common for a company in bankruptcy proceedings to post large losses in the first year. Federated Department Stores Inc. and Allied Stores Corp. lost a combined $2.43 billion in fiscal 1990, the year they sought protection from creditors.
Macy’s co-chief executives, Mark Handler and Myron Ullman, noted that “Chapter 11 provides companies with the opportunity to take one-time actions to clean up their balance sheet.â€
Macy’s “hasn’t turned the corner,†said Walter Loeb, a retail analyst with Loeb Associates in New York. “I was a little surprised by the size†of the loss.
Loeb said there are signs that Macy’s is making some progress, but he believes that the company will have to take more decisive steps to accelerate its recovery. Loeb said he anticipates Macy’s will close more marginally profitable stores.
The retailer reported that its cash flow--a critical measure of financial health for a company in bankruptcy court--was well ahead of projections. Ullman said Friday that the company’s on-hand cash was running between $50 million and $70 million per month above Macy’s expectations.
At this point in the company’s reorganization, Macy’s creditors are more likely to be concerned with the company’s performance in the coming months, particularly the Christmas season. Last year’s disastrous Christmas helped land the company in bankruptcy court.
The retailer said Friday that its results for September and preliminary figures for October showed that sales have picked up during the fall. Stores in New York and in Southern states posted the strongest results.
Ullman said the sales improvement has shown up in all merchandise categories. Like other retailers, he noted a revitalized interest among shoppers in new fashion trends.
Robert Miller, an attorney representing Macy’s bondholders, sounded positive about the retailer’s prospects. “We understand they had a decent several week period in the month of September. . . . They have addressed a lot of problems that in their view have caused their difficulties.
“We’re cautiously optimistic that things are progressing,†he said.
Macy’s will disclose next Thursday its business plan, a blueprint for the next five years that is required under the Chapter 11 process.
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