Macy’s swings to profit in latest quarter
Macy’s Inc. posted a profit for its fiscal third quarter — a turnaround from last year’s loss in the same period — as better online marketing and promotions, locally tailored merchandising and a return of affluent shoppers boosted its operations.
The nation’s second-largest department store chain reported a profit of $10 million, or 2 cents a share, for the three months ended Oct. 30, compared with a loss of $35 million, or 8 cents, for last year’s third quarter.
Quarterly revenue rose 5.7% to $5.6 billion from $5.3 billion. Sales at stores open at least a year, a key measure of operations called same-store sales, rose 3.9%.
The Cincinnati retailer’s results exceeded Wall Street expectations. Excluding one-time charges, the company earned 8 cents a share, twice the earnings analysts had expected, according to a survey by Bloomberg.
Macy’s has benefited from its efforts to integrate online sales with mobile phone and social media marketing and to let local managers help determine what customers in their areas want, Chief Executive Terry J. Lundgren said.
The success of the online marketing and the local My Macy’s program “bodes well for our business as we enter the holiday shopping season,” Lundgren said.
The Bloomingdale’s store brand also benefited from the return of upscale shoppers, whom Lundgren said the store pursued “aggressively.”
During the quarter, the company opened two Macy’s stores in Palmdale and Tracy, Calif., a new Bloomingdale’s in Santa Monica and three Bloomingdale’s Outlet stores.
Online sales through Macys.com and Bloomingdales.com rose a combined 24% for the quarter and 28.5% for the first nine months from respective year-earlier periods.
Analyst Leah A. Hartman at CRT Capital Group said Macy’s had made better use of Facebook and other social media, along with its online catalog, in determining and catering to the tastes of its customers.
“Macy’s is managing their online presence a lot better than they have been,” Hartman said.
Last week Macy’s raised its earnings outlook for the second half of the year to $1.50 to $1.55 a share, compared to its forecast in August of $1.45 to $1.50 a share. For the year, the retailer added 5 cents a share to its forecast to as much as $1.99.
The higher prospects marked the third time this year that Macy’s has raised its earnings forecast, Hartman said.
“They know what’s selling in what stores in what parts of the country, and they can be nimble in moving their inventory to meet the needs and wants of the consumer,” Hartman said.
Macy’s reported its results before the markets closed. Shares dropped 36 cents, or 1.4%, to $24.86, but the stock’s price has risen 48.3% this year.
