Macy’s Q2 tops Street; still working to optimize real estate

Macy’s Inc. on Thursday posted second quarter results that topped analysts’ expectations. But with a steep drop in profit and sales still on the decline, the department giant said it will close 100 stores. It also gave an update on its real estate strategy.



Macy's reported a profit of $11 billion for the quarter ended July 30, down from $217 million in the year-ago period. Excluding the impact of store closings and other items, Macy’s per-share earnings were 54 cents, down from 94 cents in the same quarter a year earlier but still much better than analysts had expected.



Revenue fell 3.9% to $5.87 billion, also better than expected, from $6.10 billion last year,



Same-store sales fell 2%, which was nowhere as bad as the 4.7% drop analysts had expected.



“We are encouraged by the distinct improvement in our sales and earnings trend in the second quarter,” said Terry J. Lundgren, Macy’s chairman and CEO. “Over the past few months, we have been saying that a setback is a setup for a comeback, and we now believe we are set up well to proceed to a comeback. Our sales strengthened month-by-month throughout the second quarter. This trend improvement gives us confidence in our plans for the back half of the year, and in our strategic planning for improvements to our business model going forward.”



Lundgren noted several sales-driving initiatives put in place in recent months are beginning to gain traction, including additional investments in store staffing and visual presentation, the rollout of enhanced fine jewelry departments, athletic/active apparel intensification, home store improvements and its Last Act clearance strategy.



On the real estate side, Macy’s is continuing to look for ways to monetize its store fleet, and is exploring opportunities its New York City, downtown Minneapolis and downtown Chicago flagships. The retailer said it is in negotiations to sell its men's store in San Francisco’s Union Square for redevelopment. Macy's is also in early talks about potential joint ventures and other strategic alliances with several potential partners.