Macy's Q3 Profit Up 22%, Results Beat View; Affirms Full-year Outlook

(RTTNews) - Department store chain Macy's Inc. (M) on Wednesday reported a 22 percent increase in profit for the third quarter from last year on higher sales that benefited from intensified marketing strategies. Comparable sales for the quarter increased 3.5 percent. Both revenue and earnings per share beat analysts' expectations.

Looking ahead, Macy's affirmed its outlook for fiscal 2013 earnings and comparable sales growth. The company's shares are up more than 7 percent in pre-market trades.

Terry Lundgren, chairman, president and chief executive officer of Macy's said, "Our improved sales performance resulted from continued success in the execution of our key strategies - My Macy's localization, Omnichannel integration and Magic Selling customer engagement. In addition, business in the third quarter benefited from intensified marketing strategies to emphasize the outstanding value in our merchandise deliveries."

Macy's comparable sales for the third quarter rose 3.5 percent from the prior-year period. Comparable sales is a key retail industry performance metric to gauge activity at store locations that have been open for at least a year.

Together with sales from departments licensed to third parties, sales on a comparable basis increased 4.6 percent.

Cincinnati, Ohio-based Macy's net income for the third quarter was $177 million or $0.47 per share, up from $145 million or $0.36 per share in the year-ago period. On average, twenty analysts polled by Thomson Reuters expected the company to earn $0.39 per share for the quarter. Analysts' estimates typically exclude one-time items.

Net sales for the quarter grew 3 percent to $6.28 billion from $6.08 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $6.19 billion.

Gross margin for the quarter edged down to 39.2 percent from 39.6 percent in the year-ago period, while operating margin improved to 5.7 percent from 5.4 percent in the same period last year.

Selling, general and administrative expenses for the quarter were $2.10 billion, up from $2.08 billion in the prior-year period.

Macy's repurchased about 10.1 million shares of its common stock for a total of about $447 million in the third quarter. At November 2, 2013, the company had remaining authorization to repurchase up to approximately $1.75 billion of its common stock.

Looking ahead to the second half of 2013, Macy's affirmed its forecast for comparable sales to increase in a range of 2.5 percent to 4 percent.

Lundgren said, "Our success in the fourth quarter will be driven by a wide selection of exclusive products from the most-wanted brands and designers. We will bring them to our customers, whether they shop in our stores, online, via mobile - or all three."

For fiscal 2013, Macy's reiterated its outlook for earnings per share of $3.80 to $3.90 per share and comparable sales to increase 2 percent to 2.9 percent. Analysts expect the company to report earnings of $3.78 per share for the year on revenues of $27.94 billion.

M closed Tuesday's trading at $46.33. In Wednesday's pre-market, the stock is up $3.38 or 7.30 percent to $49.71.