Macy’s shares surge more than 13% as net sales rise to $5.54bn for the quarter
Bengaluru — US retailer Macy’s said on Wednesday that stellar performance at its businesses helped push quarterly same-store sales and profit above Wall Street estimates, signaling that the firm was keeping up in a fiercely competitive retail landscape.
Macy’s shares surged more than 13% in pre-market trading after the company also raised its full-year profit forecast and issued a comparable sales growth guidance that topped estimates.
Shares of rival department stores JC Penney, Kohl’s, Nordstrom and Target also rose following the results.
Like its peers, Macy’s has faltered in the past few years as it struggled to adjust to a market where shoppers increasingly buy goods online. The company has closed more than 100 stores since 2015 and cut thousands of jobs as mall traffic plummeted and customers defected to off-price and fast-fashion sellers.
"Tax cuts, bonuses and good tax refunds have all been a windfall to consumers, who have responded by increasing spending," said Neil Saunders, MD of GlobalData Retail. "This rising tide has floated most retail boats, Macy’s among them." Macy’s also said on Wednesday that it would end a joint-venture agreement with Fung Retailing in China, which it formed in 2015 with a 65% stake, but said it would remain active on Alibaba’s e-commerce platform Tmall, as well as social media channels.
First-quarter, same-store sales rose 4.2%, easily beating Wall Street’s 1.4% average estimate, as sales rose at its Bloomingdale’s, Blue Mercury and its own Macy’s stores. This was the second straight quarter of same-store sales growth. The quarter also benefited from a change in accounting that shifted its Friends and Family promotional programme from the second quarter to the first, the company said.
"We exceeded our expectations and saw strong performance across all three brands ... as well as across all geographic regions," CEO Jeff Gennette said.
The company said it now expects adjusted profit of $3.75 to $3.95 per share for the year, up from a prior forecast of $3.55 to $3.75. It also forecast full-year comparable sales at its owned and licensed stores to rise between 1% and 2%. Analysts on average were expecting 0.3% growth, according to Thomson Reuters.
Net income attributable to Macy’s shareholders nearly doubled to $139m, or 45c per share, in the first quarter ended May 5. Excluding one-time items, it earned 48c per share. Net sales rose 3.6% to $5.54bn in the quarter. Analysts on average were expecting earnings of 37c per share, and revenue of $5.36bn.