FINANCE

Macy’s blows past Q1 estimates, raises full-year outlook

BY Marianne Wilson

Coming out of a strong holiday season, Macy’s reported a stellar performance for its first quarter that easily topped Street estimates.

Macy’s Inc. shares soared 10% in Wednesday premarket trading after the department store retailer reported first-quarter earnings that blew past consensus.

Net income rose to $139 million, or 45 cents per share, in the quarter ended May 5, up from $78 million, or 26 cents per share, in the year-ago period. Adjusted earnings per share came in at 48 cents, better than the 36 cents that analysts had forecast.

Sales rose to $5.54 billion, up from $5.35 billion last year, and besting analysts’ estimates of $5.43 billion. Total same-store sales increased 4.2%, easily beating the 1.4% increase analysts had expected. Same-store sales on an owned basis rose 3.9%.

The retailer said it experienced double-digit growth in its digital business.

“We exceeded our expectations and saw strong performance across all three brands — Macy’s, Bloomingdale’s, and Bluemercury — as well as across all geographic regions and families of business,” said Jeff Gennette, Macy’s chairman and CEO. “We are maintaining a healthy inventory position, which helped us deliver improved gross margin. The winning formula for Macy’s, Inc. is a healthy brick-and-mortar business, robust e-commerce and a great mobile experience.”

In comments, Neil Saunders, managing director of GlobalData Retail, said that Macy’s first quarter sales results suggest that the company’s recovery is gaining momentum.

“After a good holiday season, there was a question as to whether Macy’s could continue to deliver a recovery,” Saunders said. “Today’s results answer in the affirmative, with solid progress on both the top and bottom lines.”

Macy’s said it is ending its joint venture with Fung Retailing Limited in China. Instead, it will remain active on Alibaba’s Tmall platform and social media channels.

Macy’s now expects fiscal 2018 earnings per share of $3.75 to $3.95, excluding the anticipated settlement of charges tied to benefit plans and other charges. This is 20 cents higher than previous guidance and ahead of analysts’ projection of $3.61.

Sales are expected to range from a 1% decline to a 0.5% increase. And same-store sales on an owned-plus-licensed are expected to be up 1% to 2%.

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Retail sales post second straight monthly gain

BY Marianne Wilson

Consumers increased their spending in April, helping retail sales to blossom after a sluggish winter performance.

Retail sales in April increased 0.4% seasonally adjusted over March and 2.8% year-over-year as consumers continued to spend, according to the National Retail Federation said today. (The numbers exclude automobiles, gasoline stations and restaurants.) The April results build on improvement seen in March, which was up 0.3% monthly and 5.2% year over year.

NRF’s numbers are based on data from the U.S. Census Bureau, which said overall April sales – including automobiles, gasoline and restaurants – were up 0.3% seasonally adjusted from March and up 4.7% year-over-year.

“Retail sales growth remains solid and on track as households benefit from tax cuts even though they have faced unseasonable weather and bumpy financial markets,” said NRF chief economist Jack Kleinhenz said. “The tax cuts and higher savings levels should help consumers afford the recent surge in gasoline prices. And a solid job market, recent wage gains and elevated confidence translate into ongoing spending support.”

Specifics from key retail sectors during April include:’

• Online and other non-store sales were up 12.2% year-over-year and up 0.6% over March seasonally adjusted.

• Furniture and home furnishings stores were up 5.8% year-over-year and up 0.8% from March seasonally adjusted.

• Building materials and garden supply stores were up 5.6% year-over-year and up 0.4% from March seasonally adjusted.

• Electronics and appliance stores were up 2.2% year-over-year but down 0.1% from March seasonally adjusted.

• Health and personal care stores were up 0.2% year-over-year but down 0.4% from March seasonally adjusted.

• Grocery and beverage stores were down 0.1% year-over-year but up 0.4% from March.

• Clothing and clothing accessory stores were down 0.4% year-over-year but up 1.4% from March seasonally adjusted.

• General merchandise stores were down 0.8% year-over-year but up 0.3% from March seasonally adjusted.

• Sporting goods stores were down 3.8% year-over-year and down 0.1% from March seasonally adjusted.

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Late spring puts damper on Home Depot’s Q1 sales

BY Marianne Wilson

A late start to the spring selling season took a toll on The Home Depot’s first quarter sales, but the company still reported earnings that beat analysts’ expectations.

The Atlanta-based retail giant posted first quarter net sales of $24.9 billion, up 4.4% from the year-ago period but less than the $25.2 billion the Street expected. Total same-store sales rose 4.2%, also less than expected. It was the chain’s 28 consecutive quarter of positive comps, but also the lowest increase since the second quarter of 2015, which also registered 4.2%.

The company’s net income swelled to $2.4 billion, compared to $2.0 billion in the first quarter of 2017. Earnings per share were $2.08, versus the $2.05 per share that the Street expected.

“We are pleased by the strength of our business despite a slow start to the spring selling season,” said Craig Menear, chairman, CEO and president. “Outside of our seasonal business, we had solid results in all markets and categories and are seeing strong momentum in all lines of business during these first few weeks of May. These trends, as well as a favorable housing and macroeconomic backdrop, give us confidence to reaffirm our sales and earnings guidance for fiscal 2018.”

Home Depot reaffirmed its previous forecasts for 2018. It expects sales to rise roughly 6.5% and same-store sales to increase about 5%.

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