Macy's makes progress in Q2
Macy's appears to be making some headway in its turnaround efforts, reporting second quarter sales and profit that topped estimates. But the retailer still reaffirmed its downbeat guidance for the year.
Net income increased to $116.0 million, or 38 cents per share, up from $11.0 million, or 3 cents per share, in the year-ago period. Adjusted earnings per share was 48 cents.
Sales totaled $5.55 billion for the quarter, better than expected, down 5.4% from $5.87 billion last year. Same-store sales on an owned basis fell 2.8%, the 10th straight quarter of decline, and were down 2.5% on an owned-plus-licensed basis. The declines were not as bad as analysts had expected.
"Macy's second quarter numbers come as a relief," said analyst Neil Saunders, managing director of GlobalData. “Certainly, a same-store sales decline of 2.8% is far from good, but it is one of the better performances Macy's has turned in over recent periods. Of course, the question is whether this gentler decline represents a genuine turning point for Macy's, or whether it is simply a bottoming out after years of sharp deterioration." (For more, click here.)
Macy's new CEO Jeff Gennette said the company's second quarter performance benefitted from a notable contribution related to the full execution of its new women’s shoe and jewelry models and the continued successful testing of its off-price Backstage format in Macy's stores. He also said he anticipated the fall launch of a new loyalty program and the new marketing strategy will further improve Macy's sales trend in the back half of the year."
"We are working with a mindset of continuous improvement and will adapt our business in order to reach our goal of stabilizing the brick-and-mortar business while investing for accelerated growth in digital and mobile," Gennette stated. “Key to this strategy is engaging our customers with an improved experience that includes more elevated and exclusive assortments, a better integration of technology both online and in the store, and additional enhancements intended to drive traffic and sales. There is still work ahead of us, however, I’m encouraged by the progress we’re making on overall performance.”
Looking ahead, Macy's expects comparable sales for the full year to decline by 2.2% to 3.3%.
Total sales are expected to be down by 3.2% to 4.3%, and earnings and expected to fall within $3.37 and $3.62 per share.
Macy's opened 16 freestanding Bluemercury beauty stores and 12 Macy's Backstage stores in existing Macy's stores during the second quarter.