Macy’s shares soar after same-store sales and profit beat forecasts

Macy’s said stellar performance at its businesses helped push quarterly same-store sales and profit above Wall Street estimates, signalling that the firm was keeping up in a fiercely competitive retail landscape.

Macy’s shares surged more than 13% in premarket trading after the firm also raised its fullyear profit forecast and issued a comparable sales growth guidance that topped estimates.

Shares of rival department stores JC Penney, Kohl’s, Nordstrom and Target Corporation 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 closed more than 100 stores since 2015 and cut thousands of jobs as mall traffic plummeted and customers defected to offprice 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 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, Bluemercury and its own Macy’s stores. This was the second straight quarter of samestore sales growth.

The quarter also benefited from a change in accounting that shifted its Friends & 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 plus licensed stores to rise between 1% and 2%. Analysts on average were expecting 0.3% growth, according to Thomson Reuters I/B/E/S.

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.