U.S. department store chain Macy’s Inc. (M, Financial) reported second-quarter financial results on Wednesday, surpassing Wall Street's earnings and revenue estimates.
Diving into the numbers
The retailer's earnings per share for the quarter came in at 70 cents, topping estimates of 51 cents. Revenue stood at $5.57 billion, ahead of the $5.55 billion expected.
The company posted same-store sales growth of 0.5% on a year-over-year basis, marking the third consecutive quarter of comparable sales growth.
In a statement, Chairman and CEO Jeff Gennette commented on the company's performance:
"The combination of healthy stores, robust e-commerce and a great mobile experience is Macy's recipe for success. We are focused on improving our customer journey every step of the way because we know that our customers expect a great experience whenever and wherever they engage with our brands. We also continue to be disciplined with inventory management, which allows us to give our customers more fashion and freshness, while increasing sales and improving gross margin.”
The company’s operating income was $303 million, up from $282 million in the year-ago quarter. Barring impairment and other costs, the company’s operating income was $320 million.
The company generated $544 million in cash flow from operations during the first half of the year. It used $312 million to fund investing activities.
Guidance
For the year, the company projects earnings per share between $3.95 and $4.15. Revenue growth is expected to range from flat to 0.7%. Sales at stores owned or licensed by Macy’s are expected to grow 2.5%.
Future plans
The company is working toward adding more local merchandise, invigorating in-store fixtures and determining the ways in which it can rent out the surplus space at 50 locations.
In the second quarter, the company made an effort to cut excess inventory while simultaneuously revamping and refurbishing its stores. This is a major step considering the fact it is still under pressure to grow sales amid lower foot traffic at traditional shopping malls. As such, Amazon’s (AMZN, Financial) e-commerce platform is hurting the company’s brick-and-mortar sales. Macy's said stronger customer confidence, tax reform and robust employment will favorably affect the company in the second half of the year.
Disclosure: I do not hold any positions in the stocks mentioned in this article.
