Macy’s Inc. (M), one of the leading department store retailers in the United States, recently posted first-quarter 2010 results that came in line with the Zacks expectations but were ahead of the company’s own guidance.
The quarterly earnings of 5 cents a share remained in line with the Zacks Consensus Estimate, but exceeded its own guidance range of 2 cents to 4 cents. Earnings for the quarter under review rose substantially from a loss of 16 cents a share delivered in the prior-year quarter.
The company has been taking prudent steps to increase sales, profitability and cash flow, which include an 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.
The Cincinnati , Ohio-based Macy’s said that total sales grew 7.2% to $5,574 million from $5,199 million in the prior-year quarter. Comparable-store sales for the quarter jumped 5.5%, surpassing the previous guidance of approximately 5%.
Online sales, which include macys.com and bloomingdales.com, sustained their growth momentum, and were up 34% in the quarter, favorably impacting comparable-store sales by 0.9%.
Macy’s notified that gross margin expanded 130 basis points to 39.4%.
The better-than-expected sales trends prompted management to raise its fiscal 2010 forecasts on April 27, 2010.
Macy’s opined that it expects comparable-store sales to increase between 3% and 3.5%, as against 1% to 2% previously anticipated. Management guided earnings in the range of $1.75 to $1.80 per share, ahead of $1.55 to $1.60 per share predicted earlier, but fell short of the Zacks Consensus Estimate of $1.86.
However, the company cautioned that given the macro-economic conditions, it will not be prudent to increase the annual guidance further at this stage.
Macy’s, the operator of about 850 department stores, hinted that it is seeking to expand both the Macy’s and Bloomingdale’s brands. Furthermore, the company is planning to open a new smaller-format Bloomingdale’s store in Santa Monica.
The company ended the quarter with cash and cash equivalents of $981 million, long-term debt of $7,503 million and shareholders’ equity of $4,739 million.
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