Macy’s Inc. (M), one of the leading department store retailers in the United States, sustained its positive trend and posted better-than-expected sales results for the five-week period ended July 3, 2010. The company’s comparable-store sales for June 2010 rose 6.5%, following a marginal increase of 1.4% registered in May 2010 but a sharp improvement from a decline of 8.9% in June 2009.
Macy’s also indicated that comparable-store sales for the months of May and June together, including the Independence Day weekend, climbed by 5% over the previous year, and remained in line with the company’s year-to-date trend. The Cincinnati, Ohio based company pointed out that year-to-date comparable-store sales grew by 4.9%.
Macy’s noted that it now expects comparable-store sales for second-quarter 2010 to increase approximately 4.5%, and reiterated its fiscal 2010 comparable-store sales guidance of an increase of 3% to 3.5%.
Macy’s said that total sales for June jumped 9% to $2,229 million from $2,044 million in the same month last year. Year to date, sales were up 6.7% to $9,589 million from $8,987 million in the comparable year-ago period. Online sales, which include macys.com and bloomingdales.com, continued their growth momentum in June and soared 37.6% for the month under review, and were up 32.5% year to date. Macy’s department stores sell a wide range of merchandise. Macy’s products include men’s, women’s, and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods. Macy’s currently operates nearly 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico.
The company is taking steps to increase sales, profitability and cash flow, which include integration of operations, consolidation of divisions and customer-centric localization initiatives. To help drive traffic Macy’s continues to focus on price optimization, inventory management and merchandise planning. However, intense competition and a higher debt-to-capitalization ratio remain concerns.
We have a Neutral rating on Macy’s. Moreover, the Zacks #3 Rank, which translates into a short-term ‘Hold’ rating, correlates with our long-term recommendation.
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