Macy’s Inc. (M) reported better-than-expected second quarter results amid recession due to effective cost management and inventory-control measures. The company attempted to better align its cost structure with shrinking revenues.
Earnings per share (excluding one-time items), which came in at 20 cents, surpassed the Zacks Consensus Estimate of 17 cents and beat management’s guidance for earnings of 15 cents to 17 cents per share.
However, it declined 31.0% year over year due to lower revenue. Management now expects EPS for fiscal year 2009 in the range of 70 cents to 80 cents, excluding one-time items, up from its previous guidance of 40 cents to 55 cents.
On a reported basis, EPS came in at 2 cents, down from 17 cents in the prior year quarter. Earnings were negatively impacted by restructuring charges.
Macy’s total revenue for the quarter fell 9.7% to $5,164 billion, whereas same-store sales declined 9.5%. However, online sales, which include macys.com and bloomingdales.com, jumped 9.4% in the quarter and positively influenced same-store sales by 0.5%.
Management now expects fiscal year 2009 same-store sales to decline in the range of 7.0% to 7.5% as against 6.0% to 8.0% forecasted earlier. The company anticipates same-store sales in the second half of fiscal year 2009 to fall between 5% and 6%.
Through its departmental stores, Macy’s sells 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.
However, sales at these departmental stores have been declining as consumers, hit by recession and with less disposable income, focus more on basic items such as food. Moreover, rising unemployment is also taking its toll on consumers’ spending abilities.
At the end of the quarter, Macy’s has cash & cash equivalents of $515 million, with total long-term debt of $8,632 million representing debt-to-capitalization ratio of 65%.
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