Macy’s Inc. (M), the operator of departmental stores, recently reported third-quarter 2009 results. The company posted a loss of 3 cents a share that outshined the Zacks Consensus Estimate loss of 9 cents, and improved substantially from a loss of 8 cents delivered in the prior-year quarter.
Effective inventory management and division consolidation to lower costs helped the company to post a narrower quarterly loss.
The better-than-expected results prompted management to raise its earnings guidance. Macy’s now expects full year 2009 earnings in the range of $1.01 to $1.06 per share, up from the previously anticipated 70 cents to 80 cents a share. For the fourth-quarter 2009, earnings are expected between $1.00 and $1.05 per share.
On a reported basis, including one-time items, Macy’s reported a quarterly loss of 8 cents a share, an improvement over a loss of 10 cents delivered in the year-ago quarter.
Total sales for the quarter tumbled 3.9% year-on-year to $5,277 million, reflecting a comparable-store sales decline of 3.6%. Management expects comps to fall between 1% and 2% in the fourth quarter.
Macy’s, however, improved its full year comparable-store sales outlook, and now expects it to drop in the range of 5.4% to 5.7%, as opposed to a 6% to 8% fall forecasted earlier.
Online sales, which include macys.com and bloomingdales.com, jumped 21.1%, favorably impacting comps by 0.6%.
The fall in the top-line was offset by a 5.1% decline in cost of sales to $3,156 million, which helped expand gross margin by 70 basis points (bps) to 40.2%. Excluding one-time items, operating income for the quarter climbed 4.8% to $88 million, whereas operating margin expanded by 20 bps to 1.7%.
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