Macy’s Retail Holdings Inc., a wing of Macy’s Inc.(M), recently announced the issuance of $800 million senior notes. The notes are divided into two parts – $550 million and $250 million.
The $550 million senior debt carrying a due date of 2022 bears a coupon rate of 3.875% while the $250 million notes with a due date of 2042 carry a coupon of 5.125%.
Macy’s expects to close the offering on January 13, 2012 and intends to utilize the proceeds for business purposes. The company may also use the fund for retirement of debt maturing in 2012. Macy’s noted that approximately $790 million of debt is slated for retirement in March and July 2012.
Prior to it, the leading click & mortar retailer in the U.S. ended 2011 on a higher note as it registered a comparable-store sales increase of 6.2% for the five-week period ended December 31, 2011. The company’s sales fared better than its peer J. C. Penney Company Inc.(JCP), posting a marginal growth of 0.3% in comparable-store sales.
Following its better-than-expected results, the company went on to announce increased sales and earnings guidance.
Management now expects comps to increase between 5.3% and 5.5% in the fourth quarter results and 5.3% in fiscal 2011 results. Earlier, the company had guided comps in the range of 4% to 4.5% for the fourth quarter and between 4.8% and 5% for the full year.
Macy’s now projects earnings in the range of $1.55 to $1.60 for the fourth quarter and between $2.73 and $2.78 per share for fiscal 2011. Management had earlier forecasted earnings between $1.52 and $1.57 for the fourth quarter and between $2.70 and $2.75 for the full year.
Currently, Macy’s retains a Zacks #2 Rank, which translates into a short-term Buy rating. Moreover, considering the company’s fundamentals, we have a long-term Outperform recommendation.
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