Macy’s Q2 profit surges 64%, raises yearly outlook
Cincinnati — Macy’s reported a whopping 63.9% increase in its second-quarter profit, beating Wall Street estimates. The department store chain is also raising its full-year profit outlook.
Chairman and CEO Terry J. Lundgren described the quarter as "the most successful second quarter and spring season in more than a decade," adding that it came on top of an impressive first half performance last year.
Macy’s reported that its net income increased to $241 million in the three months ended July 30, up from $147 million in the year-ago period.
Revenue rose 7.3% to $5.94 billion from $5.54 billion a year ago. Same-store sales rose 6.4%. Online sales for macys.com and bloomingdales.com combined were up 40.2% in the second quarter. (Online sales are included in Macy’s same-store sales calculation for Macy’s.)
"To date this year, we have driven significant additional sales growth, gained market share, maintained strong margins, managed expenses and generated a very healthy level of cash," said Lundgren in a statement. “We have moved quickly to establish a culture of growth at Macy’s, Inc. since reorganizing the company in 2008 and 2009, and yet we feel we are just beginning to take advantage of the benefits we envision.”
The CEO said all of the company’s key strategies were working to help it better understand its customers and deliver the merchandise they want and to engage its customers in stores, online and via mobile devices.
Lundgren said the company would continue to “closely monitor developments in the economy and financial markets,” and said Macy’s was “cautious but optimistic about this fall and are staying focused on those factors we can control.”
The company opened no new stores in the first half of 2011, and reopened a Macy’s store in Warwick, R.I., following flood damage in 2010. The company closed a Macy’s furniture gallery in San Antonio, Texas and a furniture clearance center in Naperville, IL. Both businesses were transitioned into nearby Macy’s stores.
In the second half of 2011, the company is opening three new Bloomingdale’s Outlet stores, as previously announced.
The hits keep coming for Macy’s
NEW YORK — Macy’s chairman, president and CEO is walking on air these days as the nation’s leading department store chain continues to deliver impressive results amid a recessionary economy that has other operators floundering for sales.
The company said second-quarter sales at its 850 stores increased 7.3% to $5.9 billion, and same-store sales increased 6.4%. The company was able to leverage the top line growth to produce net income that grew 64% to $241 million and earnings per share that grew 57% to 55 cents a share, well ahead of the 48 cents a share analysts had expected.
“This was our most successful second quarter and spring season in more than a decade,” Lundgren said. “Importantly, it came on top of an impressive first half performance last year. To date this year, we have driven significant additional sales growth, gained market share, maintained strong margins, managed expenses and generated a very healthy level of cash.”
The improved results stem from a reorganization of the company during 2008 and 2009, which Lundgren said instilled a culture of growth at the company that was again evident in the second quarter. Buoyed by success during the first half of the year, Macy’s increased its full year sales and earnings outlook.
The company now expects same-store sales in the second half of fiscal 2011 to be up between 4% and 4.5%, which would give the company a full-year increase in the range of 4.8% to 5.1%. That is markedly higher than the full-year forecast of 3% provided at the beginning of the year. In addition, full-year earnings per share are now expected to total between $2.60 and $2.65 per diluted share, well above guidance of $2.25 to $2.30 provided at the beginning of the year.
“All of our key strategies are working, and working in unison, to help us better understand our customers, deliver the assortments and value they want and expect, and engage them in stores, online and via mobile devices with a shopping experience that is convenient and compelling,” Lundgren said. “Our Macy’s and Bloomingdale’s brands are continuing to evolve, testing new ideas and developing the extraordinary level of talent and expertise within our company. All of these factors have helped us to overcome an economic environment that remains sluggish. As we continue to closely monitor developments in the economy and financial markets, we are cautious but optimistic about this fall and are staying focused on those factors we can control.”
One thing Macy’s is doing a good job of controlling is its online business. The company disclosed that online sales increased 40.2% during the second quarter and accounted for 1.2% of the total 6.4% comp increase.
Kmart says hola to Hispanic marketing
HOFFMAN ESTATES, Ill. — Sears Holdings continues its efforts to reach more Hispanic consumers with the announcement that its Kmart brand has launched a Spanish-language miniseries on YouTube.
The eight-part miniseries, titled "Madres y Comadres," will feature two Hispanic mothers and the unique challenges they face raising a family in America while also remaining true to their Hispanic identity. The webisodes, which are styled to resemble a mock ‘telenovela,’ can be viewed at YouTube.com/MadresyComadres, the company reported.
"Kmart is a heritage brand with a rich history in America. We’re passionate about the diversity of our customer base and excited about the opportunity to speak directly with our Hispanic customers while celebrating their culture and traditions," said Mark Snyder, chief marketing officer, Kmart. "The first episode of Madres y Comadres launched this month just in time for back to school and aligns with the recently launched Latina Smart Facebook page, allowing Kmart to develop a deeper relationship with Hispanic women who are both tech savvy, yet underserved from a content perspective."
Sears Holdings’ outreach to the Hispanic community also includes a Facebook page and Twitter handle @SearsLatino.