Published: Thu, May 17, 2018
Economy | By

Macy's Inc Stock Surges on Strong Q1 Earnings Beat

Macy's Inc Stock Surges on Strong Q1 Earnings Beat

On an adjusted basis, the company earned 48 cents a share. Kistler Tiffany Companies LLC raised its position in shares of Macy's by 31.3% during the fourth quarter. Same-store sales on an owned plus licensed basis could rise as much as 2 percent.

But the results from Macy's on Wednesday paint a better-than-expected picture, and the company said momentum will continue into the latter half of the year.

Macy's Chairman and CEO Jeff Gennette said in a statement Wednesday that the retailer performed well across all three of its nameplates: Macy's, Bloomingdale's and Bluemercury.

Macy's on Wednesday reported earnings and sales that beat analysts' expectations, citing a healthier inventory position after the holiday season that prompted the company to hike its outlook for the full year. Macy's will remain active on Alibaba's e-commerce platform TMall, as well as social media channels. "While we have more work to do, the continuing improvement in our stores is encouraging and we once again achieved double-digit growth in the digital business". It also recently bought the concept store called Story, which rotates themes and what it sells every few months, and brought Story's founder Rachel Shechtman aboard to create better shopping experiences at Macy's.

"Our first quarter performance reflects solid execution of our North Star Strategy, including merchandising and marketing activities". Taken together, these positive factors give us confidence to raise both our sales and earnings guidance for the fiscal year.

Consumer spending aside, Macy's strong results were also impacted by having a low bar for success given that same-store sales dropped by 5.2% the year before.

Net sales rose 3.6 percent to $5.54 billion in the quarter. Revenue is now expected to be down 1 percent to up 0.5 percent.

For the period ended May 5, Macy's Inc. earned $139 million, or 45 cents per share. The company anticipates recognizing additional charges of about $10 million related to the wind-down over the course of fiscal 2018.

"It was just a terrific first quarter all around", she said.

Macy's said a stellar performance at its businesses helped push quarterly same-store sales and profit well above Wall Street estimates, signaling the company was keeping up in a fiercely competitive retail landscape. The business's quarterly revenue was up 1.8% compared to the same quarter past year.

The quarter also benefited from a change in accounting that shifted its Friends & Family promotional program from the second quarter to the first, the company said. Net operating cash flow jumped 36% to $322 million. Net cash used by financing activities in the first quarter of 2018 was $99 million, contrast with $273 million previous year. Morgan Stanley downgraded Macy's from an "equal weight" rating to an "underweight" rating and dropped their target price for the company from $29.71 to $25.00 in a report on Thursday, May 10th. The company has come to a mutual agreement to end the joint venture with Fung Retailing Limited. Macy's topped a MarketBeat-published analyst average adjusted diluted earnings per share estimate of 35 cents.

When it comes to revenue for 2018, Macy's Inc says it is expecting it to range from a 1% decline to a 0.5% increase from 2017 revenue. Comp sales on an owned plus licensed basis are seen rising 1%-2%.

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