Miracle on 34th St.

Macy’s shares up on profit surprise

Macy’s shares surged 11 percent on Thursday after the retailer delivered betterthan-expected profits despite an unusually warm quarter that has tanked demand for fall fashions.

The department-store giant said its margins improved largely because it did a better job of managing its inventory and isn’t facing the liquidation nightmares of last year. Net income more than doubled to $36 million in the quarter ended Oct. 28, or 12 cents per share, from $17 million, or 5 cents a share, a year earlier.

But Jack Frost can’t arrive fast enough for Macy’s, which has more boots, winter coats, sweaters and other winter merchandise than it would like at this time of year.

The biggest department store in the US said its samestore sales were down 3.6 percent and total sales were down 6.1 percent to $5.3 billion — largely because of weather issues.

Transactions were down 7.3 percent in the quarter.

The hurricanes in September cost Macy’s about $20 million in lost sales as stores got shuttered due to the storms, while warmer weather cost it another $50 million, the company said on a Thursday conference call.

“All the cold-weather businesses were the weakest in the quarter and home-related merchandise was soft,” said the company’s chief financial officer, Karen Hoguet, adding that the company expects the fourth quarter sales to improve as “hopefully cold weather” kicks in.

Macy’s brass is also betting on its new loyalty program, Star Rewards, which it launched on Oct. 2 and is aimed at 10 percent of its customers who have a Macy’s credit card and account for 50 percent of Macy’s sales.

Macy’s banked $4 million less in the most recent quarter on its proprietary credit card compared with a year earlier — or $161 million — largely because of weather issues, the company said.

“It improved after we launched our new loyalty program,” Hoguet said.

“Customers find the rewards easy to understand,” added Macy’s Chief Executive Jeff Gennette, flagging the free shipping as a big attraction.

Macy’s also said that sales of handbags and beauty products — fueled by Blue Mer- cury — also improved in the quarter but that handbags sales “are still negative,” Gennette said.

Meanwhile, shares of Nordstrom were down by 1.3 percent in after-hours trading because the Seattle-based company delivered lower same store sales — down 0.9 percent — than Wall Street had expected, though the upscale chain beat analysts’ revenue and earnings estimates. Total revenue in the quarter was up 2.5 percent from a year earlier, to $3.63 billion.

Kohl’s was the only department store chain to report a quarterly sales increase — albeit an anemic one — and the company’s shares edged up 38 cents, to $41.17, on Thursday.