Macy’s Inc. (M) recently posted better-than-expected fourth-quarter 2009 results buoyed by effective inventory management,  division consolidation and the customer-centric localization initiative called ‘My Macy’s’ aimed at improving sales and reducing operating expenses.

Quarterly earnings of $1.40 per share outdid the Zacks Consensus Estimate of $1.32, and exceeded its own guidance of $1.35 to $1.37. The earnings rose 32.1% from $1.06 per share delivered in the prior-year quarter.

Macy’s now expects fiscal year 2010 earnings per share in the range of $1.55 to $1.60. The current Zacks Consensus Estimate for fiscal year 2010 is $1.58. Over the last 30 days, the Zacks Consensus Estimate has risen 6.8%, with 14 out of 17 analysts covering the stock raising their estimates, and one analyst lowering his expectation.

On a reported basis, including one-time items, earnings came in at $1.10 per share versus a loss of $11.33 posted in the year-ago quarter.

After tumbling 3.9% in third-quarter 2009, total sales dropped marginally by 1.1% to $7,849 million in the fourth quarter, reflecting a comparable-store sales decline of 0.8%, which fared better than management’s own guidance of a 1% to 2% decline.

Macy’s, the operator of about 850 department stores, now expects comps to rise in the range of 1% to 2% for fiscal year 2010.

Online sales, which include macys.com and bloomingdales.com, jumped 26.6%, favorably impacting comps by 0.7%.

The marginal fall in the top-line was more than offset by a 4.9% decline in cost of sales to $4,577 million, which helped expand gross margin by 240 basis points (bps) to 41.7%. Excluding one-time items, operating income for the quarter climbed 22.4% to $1,060 million, whereas operating margin expanded by 260 bps to 13.5%.

Macy’s ended fiscal year 2009 with cash and cash equivalents of $1,686 million, long-term debt of $8,456 million, and shareholders’ equity of $4,701 million.
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