Macy's Not Renegotiating Rents

CINCINNATI-Despite total and same-store sales declines, Macy’s relationships with its landlord remains largely unchanged. Mall owners are not attempting to raise common area charges, and the retailer is not engaging in a major rent renegotiation program.

“We have long-term agreements,” explained Karen Hoguet, CFO. Nor has the trend toward shortening operating hours been a problem, she added.

“Obviously, with weaker malls, it isn’t a good thing,” she said. “But we’re not seeing this as a major issue.”

Some expansion will take place this year. The company expects to open new Macy’s stores in metro Kansas City, MO; Dallas; and Phoenix as well as a replacement Macy’s store in Nampa, ID, and to reopen two Macy’s in the Houston area that were damaged in Hurricane Ike. The company closed 11 Macy’s stores in the fourth quarter, though that includes a unit in Santa Monica, CA, that will reopen after the redevelopment of the Macerich Co.’s Santa Monica Place.

Sales in the quarter were $7.9 billion, down 7.7% from the same period last year. Online sales–which combine macys.com and bloomingdales.com–rose 24%. Comp-store sales–which include internet sales–declined 7%. Net income was $310 million, down from $750 million for the year-ago quarter.

For fiscal 2008, total sales were $24.9 billion, down 5.4% percent from fiscal 2007. Online sales rose 29%. Comp-store sales dropped 4.6%. Net income was $280 million, compared with $893 million for fiscal 2007.

Macy’s operates more than 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s.