Macy's Earnings Swing to Profit, Top Expectations
Department store operator Macy's (M) reported Wednesday morning that it swung to a third-quarter profit, with earnings topping Wall Street expectations as the company benefited from tailored local offerings and the return of upscale customers to its high-end Bloomingdale's stores. The retailer also reiterated its recently raised outlook for the second half and full year.
Macy's said it earned $10 million, or 2 cents per share, compared to a loss of $35 million, or 8 cents per share in the same period last year. Excluding items, Macy's earned 8 cents per share, up from a loss of 3 cents per share. Analysts had predicted earnings of 3 cents per share.
"Throughout 2010, we have gained confidence and momentum as customers have responded favorably to our execution of key strategies developed and activated over the past few years," said Chairman, President and CEO Terry Lundgren. "This bodes well for our business as we enter the holiday selling season with a differentiated and tailored merchandise offering, compelling marketing, and an energized organization of store associates focused on engaging customers. Simultaneously, Bloomingdale's has aggressively capitalized on the return of the upscale customer."
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Sales in the third quarter totaled $5.6 billion, up 6.6% from total sales of $5.3 billion in the third quarter of 2010. Analysts were calling for revenue of $5.55 billion. Macy's same-store sales were up 3.9% in the quarter. Online sales rose 24% in the third quarter, and positively affected the company's same-store sales by 0.8 percentage points.
In the third quarter, the company opened two new Macy's stores in Palmdale and Tracy, Calif.; a new Bloomingdale's in Santa Monica, Calif.; and three new Bloomingdale's Outlet stores.
Looking ahead, Macy's reiterated the increased guidance it issued last week for the second half of 2010. The company expects same-store sales in the fourth quarter to be up 3% to 4%, or 3.3% to 4% in the second half, compared with the August guidance of 3% to 3.5%.
Based on stronger sales expectations, Macy's increased its earnings guidance for the second half to $1.50 to $1.55 per share, excluding items, up from the August guidance of $1.45 to $1.50 per share. For the full-year, earnings guidance is $1.94 to $1.99 per diluted share, up from $1.89 to $1.94, excluding items. Analysts expect earnings of $1.94 per share.
Shares of Macy's were up 1% in premarket trading.
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