Macy's Profit Misses View, Increases Share Buyback And Dividend

(RTTNews) - Department store chain Macy's, Inc. (M) reported Wednesday a profit for the first quarter that decreased from last year, reflecting a sales drop and lower operating margins amid higher expenses.

Earnings per share missed analysts' expectations, while quarterly net sales topped their estimates by a whisker. The company also reiterated its earnings, sales and comparable sales growth guidance for the full-year 2015.

Further, Macy's also announced a 15 percent increase in its quarterly dividend on common stock and authorized an additional $1.5 billion share repurchase.

"We had expected our first quarter sales to grow at a rate lower than our guidance for the full year. We fell short because of a confluence of factors," Chairman, President and CEO Terry Lundgren said in a statement.

The Cincinnati, Ohio-based retailer reported net income of $193 million or $0.56 per share for the first quarter, lower than $224 million or $0.60 per share in the prior-year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $0.62 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged down 0.7 percent to $6.23 billion from $6.28 billion in the same quarter last year, but topped twenty Wall Street analysts' consensus estimate of $6.32 billion by a whisker.

Comparable sales growth on an owned plus licensed basis edged down 0.1 percent. On an owned basis, comparable sales declined 0.7 percent.

"Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy's and Bloomingdale's stores, including New York City, Chicago, Las Vegas and San Francisco," Lundren added.

Operating margin for the quarter contracted 50 basis points to 6.6 percent from last year as selling, general and administrative expenses as a percentage of total sales grew 60 basis points, partially offset by gross margin improvement of 10 basis points.

Additionally, Macy's board authorized a 15 percent increase in quarterly dividend on common stock to $0.36 per share, payable on July 1 to shareholders of record at the close of business on June 15, 2015.

The board also raised the company's share repurchase authorization by $1.5 billion, bringing the remaining authorization outstanding at the end of the first quarter to about $2.1 billion. Since resuming its share repurchase program in August 2011, Macy's had bought back about 123.3 million shares for about $5.7 billion through the end of the first quarter.

Looking ahead to fiscal 2015, the company reiterates its earnings guidance in a range of $4.70 to $4.80 per share on projected total sales growth of about 1 percent and comparable sales growth of about 2 percent. Street is currently looking for full-year 2015 earnings of $4.75 per share on annual net sales of $28.44 billion.

"Looking ahead, we have many reasons to be encouraged about the growth prospects for our business. We are excited by the range of new initiatives being put in place today - both organic and through our new business development organization," Lundgren stated.

M closed Tuesday's regular trading session at $65.33, down $0.23 on a volume of 6.01 million shares. In the past 52-week period, the stock has been trading in a range of $54.84 to $69.98.