Shop­ping surge lifts prof­its, mo­bile, on­line sales of Macy’s

Edmonton Journal - - FINANCIAL POST - MICHELLE CHAP­MAN AND ANNE D’IN­NO­CEN­ZIO

With shop­pers in a mood to spend, par­tic­u­larly on cloth­ing, Macy’s sur­passed profit and rev­enue ex­pec­ta­tions for the first quar­ter and raised its out­look.

The com­pany re­ported its sec­ond straight quar­ter of higher sales at ex­ist­ing stores after a three-year funk. Its shares surged nearly nine per cent Wed­nes­day, and the stocks of other depart­ment store chains rose as well. The rosy per­for­mance bodes well for J.C. Pen­ney and Nord­strom, both set to re­port their quar­terly re­sults on Thurs­day. All are work­ing to ap­peal to shop­pers who are spend­ing more on­line rather than at depart­ment stores.

Macy’s has been ex­pand­ing its store la­bel brands, adding more of the off-price Back­stage stores, and up­grad­ing its check­out tech­nol­ogy to make it faster and eas­ier for shop­pers. It’s also test­ing more cu­rated mer­chan­dise dis­plays and lo­cal­ized mar­ket­ing. It also re­cently bought the con­cept store called Story, which ro­tates themes and what it sells ev­ery few months, and brought Story’s founder Rachel Shecht­man aboard to cre­ate better shop­ping ex­pe­ri­ences at Macy’s.

Chair­man and CEO Jeff Gen­nette said the com­pany saw strength across its Bloom­ing­dale’s, Blue­mer­cury and Macy’s brands. He said re­sults are im­prov­ing at its stores, cou­pled with ro­bust on­line and mo­bile growth. Macy’s also said busi­ness got a lift from an in­crease in spend­ing from in­ter­na­tional tourists, the first time since 2014.

“While we have more work to do, the con­tin­u­ing im­prove­ment in our stores is en­cour­ag­ing,” Gen­nette said in a state­ment.

Macy’s re­sults fol­low gov­ern­ment data re­leased Tues­day show­ing that U.S. re­tail sales rose a solid 0.3 per cent in April, a sign that shop­pers may be re­bound­ing from weak spend­ing ear­lier this year. The spend­ing gains were spread across most re­tail cat­e­gories, es­pe­cially big in­creases at fur­ni­ture and cloth­ing stores.

Tax cuts have also left most U.S. house­holds with more money to spend, though higher ga­so­line prices have been cut­ting into that.

Neil Saunders, manag­ing di­rec­tor of Global-Data Re­tail, de­scribed Macy’s re­sults as “solid progress” but cau­tioned that much of the mo­men­tum is fu­elled by the favourable eco­nomic back­drop. He also noted that the shift of the big Friends and Fam­ily pro­mo­tion to the first quar­ter helped re­sults.

“Macy’s still has many fun­da­men­tal is­sues that it needs to work through,” he wrote, not­ing a still-unattrac­tive store ex­pe­ri­ence, cus­tomer traf­fic de­clines in many lo­ca­tions and tough com­pe­ti­tion.

For the pe­riod ended May 5, Macy’s Inc. earned US$139 mil­lion, or 45 cents per share. A year ear­lier, it earned US$78 mil­lion, or 26 cents per share. Strip­ping out im­pair­ment charges and other costs, earn­ings were 48 cents per share.

An­a­lysts polled by Zacks In­vest­ment Re­search were call­ing for earn­ings of 36 cents per share.

Rev­enue rose to US$5.54 bil­lion from US$5.35 bil­lion, also beat­ing Wall Street’s view. Sales at com­pany-owned stores open at least a year in­creased 3.9 per cent. At owned and li­censed lo­ca­tions, they climbed 4.2 per cent.

Macy’s now fore­sees a fis­cal 2018 ad­justed profit of US$3.75 to US$3.95 per share. The chain’s prior out­look was for an ad­justed profit be­tween US$3.55 and US$3.75 per share.

BEBETO MATTHEWS/AP FILES

Macy’s posted its sec­ond straight quar­ter of higher sales at ex­ist­ing stores after a three-year funk. Big spend­ing gains at fur­ni­ture and cloth­ing stores helped boost U.S. re­tail sales.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.