Macy’s on Thursday reported fiscal second-quarter profit and revenue that topped analyst estimates, as customers returned to its stores to buy denim, luggage and new dresses.
The department store chain also hiked its outlook for 2021, heading into the back half of the year. Despite the uncertainty from the pandemic, Macy’s said its turnaround strategy is working and drawing in new shoppers. The company also said it reinstated its dividend and its board approved a $500 million stock buyback program. Macy’s shares soared 15% in early trading on the news. CEO Jeff Gennette said momentum in the first quarter continued into the second quarter, as the retailer attracted more younger customers to shop in its stores. The company said it saw 5 million new customers during the quarter, 41% of which came through digital.
Here’s how the company did for its fiscal second quarter, compared with what Wall Street was anticipating, using a survey of analysts by Refinitiv:
- Earnings per share: $1.29 adjusted vs. 19 cents expected
- Revenue: $5.65 billion vs. $5.01 billion expected
Macy’s net income for the period ended July 31 grew to $345 million, or $1.08 per share, compared with a net loss of $431 million, or $1.39 per share, a year earlier. Excluding one-time adjustments, Macy’s earned $1.29 per share during the quarter. Analysts had been looking for 19 cents a share. Net sales grew to $5.65 billion from $3.56 billion a year earlier. That beat estimates for $5.01 billion. Macy’s said its comparable sales on an owned plus licensed basis grew 62.2% year over year, while analysts surveyed by Refinitiv anticipated 41.1% growth.
E-commerce sales were down 6% from a year earlier, when Macy’s stores were shut due to the pandemic and shoppers resorted to buying online. They were up 45% on a two-year basis and accounted for 32% of net sales. Macy’s raised its outlook for net sales in fiscal 2021 to be in a range of $23.55 billion to $23.95 billion, up from $21.73 billion to $22.23 billion. It expects full-year adjusted earnings to be in a range of $3.41 to $3.75 per share, up from guidance of $1.71 to $2.12 a share. Analysts polled by Refinitiv had been looking for adjusted earnings per share of $2.33 on sales of $22.15 billion.
Rival Kohl’s similarly hiked its full-year outlook Thursday, anticipating a strong back-to-school shopping season. Walmart and Target earlier in the week reported better-than-expected quarterly sales, as Americans spent their paychecks on new apparel, backpacks and beauty items.
The contagious delta variant has yet to show much of an impact to retailers’ results. Businesses are closely monitoring the variant’s spread, and many have reinstated mask mandates. But the impact may vary store to store, as Covid’s surge is worse among populations with lower vaccination rates.
Macy’s also announced on Thursday a partnership with the owner of Toys R Us, whereby it will be opening more than 400 shop-in-shops with the toy brand beginning next year. The company is already offering an assortment of toys online, ahead of the holiday season.
As of Wednesday’s market close, Macy’s shares are up more than 60% year to date, putting its market value at $5.64 billion.
Lauren Thomas | CNBC