Macy’s, Inc. (M), one of the leading department store retailers in the United States, recently posted sales results for the four-week period ended February 26, 2011.
Macy’s comparable-store sales for February 2011 rose 5.8%, following an increase of 2.6% registered in January 2011 and reflecting an improvement over an increase of 3.7% witnessed in February 2010.
Management indicated that fiscal 2011 took off with better-than-expected sales results across Macy’s and Bloomingdale’s.
Macy’s informed that comparable-store sales for the combined March-April period are expected to climb by approximately 3% with March sales expected to be down and April sales to be up due to the shift in Easter holidays to April 24 this year from April 4 in the prior year.
Cincinnati, Ohio-based company, Macy’s, said that total sales for February jumped 5.9% to $1,765 million from $1,667 million in the same month last year.
Online sales, which include macys.com and bloomingdales.com, continued their growth momentum in February and soared 30.9% for the month under review. Macy’s is seeking to expand both the Macy’s and Bloomingdale’s brands.
Macy’s at its last earnings release forecasted comparable-store sales growth of 3% for fiscal 2011. Management also hinted at fiscal 2011
Macy’s, which competes with J. C. Penney Company Inc. (JCP), currently operates approximately 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 flows, which include integration of operations, consolidation of divisions, customer-centric localization initiatives, as well as developing the e-commerce business and online order fulfillment centers. To help drive traffic Macy’s continues to focus on price optimization, inventory management and merchandise planning.
However, intense competition and higher debt-to-capitalization ratio remain concerns. Moreover, Macy’s customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels, which may negatively impact their discretionary spending, and in turn the company’s growth and profitability.
Currently, we have a long-term Neutral rating on the stock. However, Macy’s holds a Zacks #2 Rank, which translates into a short-term Buy rating.
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