ShareThis Page
Business Headlines

Macy's profit surpasses expectations, shares soar

| Wednesday, May 16, 2018, 9:57 a.m.
Macy’s beat all profit and revenue expectations for the first quarter of the year and raising its outlook.
Bebeto Matthews/AP
Macy’s beat all profit and revenue expectations for the first quarter of the year and raising its outlook.

NEW YORK — With customers in a mood to spend, particularly on clothing, Macy's surpassed all profit and revenue expectations for the first quarter of the year and raising its outlook.

Its shares surged nearly 7 percent Wednesday, and the results helped the stocks of other department store chains, all trying to appeal to shoppers who are spending more online.

Macy's, the first of the major department store to release its quarterly results, 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.

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.

“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 percent 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. Those are trends that could help department stores.

A strong job market could help drive spending gains in the months ahead. Tax cuts have also left most U.S. households with more money to spend, though higher gasoline prices have been cutting into that. Measures of consumer confidence remain mostly healthy.

Neil Saunders, managing director of GlobalData Retail, described Macy's results as “solid progress” but cautioned that much of the momentum is fueled by the favorable 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 $139 million, or 45 cents per share. A year earlier, the company earned $78 million, or 26 cents per share. Stripping out impairment charges and other costs, earnings were 48 cents per share. Excluding asset sales gains, earnings were 42 cents per share.

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

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

Macy's now foresees a fiscal 2018 adjusted profit of $3.75 to $3.95 per share. Revenue is now expected to be down 1 percent to up 0.5 percent. The chain's prior outlook was for an adjusted profit between $3.55 and $3.75 per share and revenue that would be down 0.5 percent to 2 percent.

The company, which has corporate offices in Cincinnati and New York, also announced that it's ending its China e-commerce joint venture with Fung Retailing Ltd. It will remain active on Alibaba's e-commerce platform TMall and social media channels.

Shares rose $1.94 to $31.89 on Wednesday.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.

click me