Nov 12, 2010
Macy's expects its Christmas stocking to be full
Nov 12, 2010
NEW YORK (Reuters) - Macy's Inc (M.N) forecast strong sales during the upcoming holiday season, saying it expects the success of its efforts to cater to local tastes and an uptick in spending at its upscale Bloomingdale's chain to continue.
Chief Executive Terry Lundgren said his company's performance "bodes well for our business as we enter the holiday selling season" after it reported better-than-expected third-quarter sales and profits.
Macy's has led the charge among department store operators, consistently beating Wall Street sales forecasts, winning market share from rivals such as J.C. Penney Co Inc (JCP.N), and deftly positioning itself to take advantage of the recovery in the middle class's ability to spend, analysts said.
Sales rose 6.6 percent to $5.62 billion during the quarter ended Oct. 30, beating Wall Street forecasts of $5.56 billion, according to Thomson Reuters I/B/E/S.
Sales at stores open at least a year, or same-store sales, rose 3.9 percent during the quarter, and Macy's reaffirmed its forecast that fourth-quarter same-store sales would grow by 3 percent to 4 percent.
Macy's reported net income of $10 million, or 2 cents per share, for the third quarter ended Oct. 30, compared with a year-earlier loss of $35 million, or 8 cents per share.
Excluding one-time items, Macy's reported a profit of 8 cents per share, beating Wall Street's average forecast of 5 cents.
"I think they're well positioned for the holidays in the sense that inventory is clean-- they've got stuff people want," said Morningstar analyst Paul Swinand.
Swinand also said that Bloomingdale's, which accounts for about 10 percent of sales, had allowed Macy's to benefit from the strong comeback in luxury sales in the United States.
Macy's gross margins edged down only slightly, falling 0.2 percentage point to 40 percent, signaling the retailer's inventory did not build up too much and a lower risk of discounting during the upcoming holidays.
Macy's raised its full-year profit outlook by 5 cents to a range of $1.94 to $1.99 a share. That compares with Wall Street's average estimate of $1.96, according to Thomson Reuters I/B/E/S.
Macy's shares, which last week hit a yearly high after the company reported strong October sales and raised its forecast, were down 0.2 percent at $25.16 in late morning trading. The S&P Retail Index .RLX was up 0.2 percent, while Penney shares were up 0.8 percent and Kohl's were down 1 percent.
MORE EXCLUSIVE, MORE REGIONAL
Macy's credited its exclusive product lines by top names such as Madonna and Kenneth Cole for differentiating it from rivals and luring shoppers for its strong quarter.
The company has also aggressively sought to land more exclusive lines in a bid to give shoppers a reason to go to Macy's rather than Penney and Kohl's Corp (KSS.N) , which have also been racing to win their own exclusive merchandise lines.
Swinand and other analysts have said that the company's MyMacy's program, launched two years ago, has allowed Macy's regional managers to focus on each market's tastes and garner sales.
During the quarter, online sales rose 24 percent and gave same-store sales a 0.8 percentage point lift.
Macy's which operates about 850 stores, largely in the United States, said it opened two new Macy's stores, one Bloomingdale's and three Bloomingdale's outlets during the quarter.
(Reporting by Phil Wahba; Editing by Lisa Von Ahn, Dave Zimmerman)
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