The U.S. department store chain Macy’s (M, Financial) surpassed first quarter earnings and revenue expectations as a result of heavy customer spending. Sales of the company’s fashion department were stunning in the quarter. As a matter of fact, the company opened 18 Backstage locations during the quarter, which contributed to the company’s quarterly revenue. Macy’s three sectors: Macy's, Bloomingdale's and Bluemercury, performed well during the quarter.
Bird’s-eye view
The company reported first-quarter adjusted earnings per share of 48 cents, which was 11 cents more than what was forecasted. Macy’s revenue during the same period came in at $5.5 billion, up from an estimate of $5.4 billion. Macy’s management had transferred the Family and Friends 30% off sales promotional event from second qiarter to this quarter. The event generated 2.5% sales increase. Without it, its increasein sales would have been just 1.7%. Company’s comparable store sales rose 4.2% on a year-over-year basis, up from 1.4% forecasted.
During the quarter, the company incurred an impairment charge of $19 million due to loss in Macy’s China limited venture. The company’s net income amounted to $139 million or 45 cents a share, up from $78 million or 26 cents a share reported in the year-ago quarter.
In view of intense competition, the company has been focusing on introducing new concepts, such as branded pop-up shops. It has also expanded its off-price business. Furthermore, the company launched mobile checkout in all its locations, which speeds up transactions. In some locations, the company added a virtual reality shopping experience. As a matter of fact, the company is revatilizing 50 stores across the U.S. giving its brand a dynamic look.
Macy’s recently acquired Story, which is a New York-based concept shop that changes the way the customers shop in stores.
Guidance
The retail giant projects full-year earnings per share to fall within a range of $3.75 to $3.95. However, analysts call for $3.61 a share for the whole year. As far as sales are concerned, the company expects them to rise by 0.5%. Furthermore, comps are expected to grow 2%. The company plans to open 100 Backstage locations this fiscal year.
Disclosure: I do not hold any position in the stock mentioned in this article.
