Macy's (NYSE: M) Comeback Still a Thing Despite First-Quarter Losses

It was just about a week ago when we took a look at Macy's (NYSE: M) and discovered that there might be a comeback buried in this outmoded little dinosaur of mall-facing retail. The company announced its first-quarter sales figures, and while they were pretty much as bad as was expected, they weren't as bad as they might have been.

Bad, But Not That Bad, Considering

Everybody knew that the first quarter was going to be pretty bad at Macy's. Macy's was already coming off a slow period anyway; retailers historically have a slowdown in the first three months of the year following the excesses of the holiday season. Moreover, inclement weather also steps in to hamper shoppers, which is a real problem for a company that's focused on physical retail and depends on foot traffic to keep merchandise flowing off shelves.

That was when March hit Macy's like a collection of tungsten rods dropped from low Earth orbit. The coronavirus shutdowns, and the Massive Indiscriminate Coronavirus Sales Event, did horrendous things to Macy's share prices in much the same way they did just about every other company in the world's. A recovery did follow, but only of the most anemic sort as the company discovered that its formerly anemic stock price in late 2019 was now an aspirational goal in 2020.

Yet after announcing its first-quarter results, the stock price enjoyed a pop upward, gaining an extra 1.5% in premarket trading, and managing to hold on to a lot of that gain going into the trading day.

Congratulations! It's Not a Complete Disaster!

Make no mistake, Macy's numbers for the first quarter were terrible, objectively. The company reported a net loss of $3.58 billion, which on a per-share basis works out to $11.53 lost. Considering that its first-quarter in 2019 boasted a net income of $136 million, or $0.44 per share, this is catastrophic.

However, a couple key points emerged to give some hope to the comeback narrative. One, despite the fact that Macy's stores all over the United States and beyond were shuttered by government mandate, the company still had revenue. It reported revenue of $3.02 billion, in fact, and though that was down 45% from the same time last year, revenue is revenue, income is income, and that means a viable company.

An Unexpectedly Bright Future, But Not Without Risk

There's even better news afoot when looking forward for Macy's. The company has just survived what may be the single worst period of economic history since at least the Great Depression, and possibly worse still. It didn't come out of that unscathed, naturally, but it did come out the other side as a viable company, which is more than a lot of smaller businesses can say, sadly.

Macy's has reopened nearly all of its stores, which will allow that foot traffic to come back on at least some level, and reports note that Macy's online retail presence has been its saving grace, with sales therein proving brisk. The company is remaining mum about its full-year guidance, which isn't exactly out of line given the year we've had so far. As one additional note of positive news, Macy's doesn't expect any further shutdowns this year, though the company is working to address any regional problems that crop up and is emphasizing flexibility in the face of massive and crippling uncertainty.

So, yes, Macy's has survived a test that has killed other businesses outright so far. It managed to produce revenue even in a serious downturn, proving there's at least some interest in its product line, and the early reports suggest that reopened stores in May and June have done better than expected already.

Certainly, Macy's has learned some lessons here. It's already putting out some impressive sales promotions to draw shoppers back; one sale involves up to 60% off on designer handbags, which should draw those being frugal, but not that frugal, in the face of uncertainty. It's learned firsthand the value of an online retail presence to carry a business through rough patches, much in the way that Target (NYSE: TGT) and Walmart (NYSE: WMT) has in recent months.

If Macy's can take these lessons to heart and carry on with them, the result should be a much more resilient retailer ready to take on the online giants and continue to be a viable and even vibrant part of the retail landscape. There's a lot to like at Macy's right now, more so than there was even before the pandemic started.