Macy's shares surge as sales and profits beat forecasts

Lloyd Doyle
May 16, 2018

According to the trading reports on Wednesday, the company's shares shot up more 7 percent to $32.16 a piece, which was on pace for their best day since November 29, when the stock gained 8.16 percent.

Macy's shares have soared after the company released its latest quarterly results, which surpassed expectations, as the company experienced double-digit growth in its digital business while same-store sales blew past expectations. On an adjusted basis, the company earned 48 cents a share. Insiders sold 107,392 shares of company stock valued at $3,173,164 over the last quarter. (M) on Wednesday reported fiscal first-quarter earnings of $139 million. The company said its strength was broad-based across geographic regions and across its stable of brands, which includes Bloomingdale's and Bluemercury. "We are maintaining a healthy inventory position, which helped us deliver improved gross margin", he said. Revenue was $5.5 billion vs. $5.4 billion expected, rising 3.6%. Excluding a shift of Friends and Family from Q2 to Q1, same-store sales were up 1.7% on an owned plus licensed basis.

Macy's Inc also updated its outlook for the full year of 2018 in its most recent earnings report. Finally, Morgan Stanley boosted their price target on shares of Macy's from $23.00 to $27.00 and gave the stock an equal weight rating in a research note on Wednesday, February 28th. This is up 3.6% from its revenue of $5.35 billion that was reported in the first quarter of the previous year.

Macy's good quarter suggests that many consumers are still willing to actually go to stores to shop instead of just buying clothes on their phones and tablets. In particular, we're interested in following the recovery now being seen at Macy's as sales continue to rise.

Macy's, Inc.'s operating income for the first quarter of 2018 totaled $238 million, or 4.3 percent of sales, contrast to $219 million, or 4.1 percent of sales, for the first quarter of 2017. "Our best customer is responding well to the improvements we've made to her experience in our stores, on.com and through the Macy's app." . We also saw continued healthy consumer spending and significant improvements in worldwide tourism.


In related news, CFO Karen M. Hoguet sold 67,515 shares of Macy's stock in a transaction on Thursday, March 1st.

Net cash offered by operating activities was $322 million in the first quarter of 2018, contrast to $237 million in the first quarter past year.

The company has set a new approach to its business in China. "Clearly that's wrong because that's where Macy's is", said Bob Phibbs, CEO of the Retail Doctor, a consulting firm, in an interview after the results came out.

The company also saw a boost from global tourism but said it would be ending its joint venture with Fung Retailing Limited in China. The department-store chain now expects annual sales to be in a range of down 1% to up 0.5% from its prior forecast of sales falling between 0.5% and 2%.

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