Macy’s, Inc. (M), one of the leading department store retailers in the United States, recently posted lower-than-expected sales results for the four-week period ended October 29, 2011. The underperformance resulted from a modest growth in the month of October due to the shift of Macy’s Shop For A Cause charity shopping event to August this year from October in the prior year.
The company also registered soft sales for winter related merchandise, which includes coats, hats and sweaters as October experienced unusually warm weather.
Macy’s comparable-store sales for October 2011 rose 2.2% compared with an increase of 4.9% in September 2011 and a jump of 2.5% in October 2010. Year-to-date comps increased 5.3%.
Cincinnati, Ohio-based Macy’s said that its total sales for October grew 2% to $1,842 million from $1,806 million in the same month last year. Year-to-date, sales rose 5.7% to $17,681 million from $16,734 million reported in the prior-year period.
Online sales, which include sales from macys.com and bloomingdales.com, continued to show growth momentum in October, soaring 39.2%. The company seeks to expand both Macy's and Bloomingdale's brands online. Year-to-date, online sales were up 39.4%.
Third Quarter Sales Remains in Line
Macy’s stated that comparable-store sales for the third quarter of 2011 climbed 4%, which met the lower end of the previously provided guidance range of 4% to 4.5%. Net sales for the quarter rose 4.1% to $5,853 million from $5,623 million in the year-ago quarter. Online sales surged 39.8%. For the fourth quarter, management reiterated comps to increase between 4% and 4.5%.
Let’s Conclude
Macy’s department stores sell a wide range of merchandise. Its products include men’s, women’s, and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods.
Macy’s, which competes with J. C. Penney Company Inc. (JCP), currently operates approximately 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico.
In an attempt to increase sales, profitability and cash flows, the company has been taking steps such as integration of operations, consolidation of divisions, customer-centric localization initiatives, as well as developing e-commerce business and online order fulfillment centers. Moreover, Macy’s continues to focus on price optimization, inventory management and merchandise planning to drive traffic.
Currently, we have a long-term ‘Outperform’ rating on the stock. Moreover, Macy’s holds a Zacks #1 Rank, which translates into a short-term ‘Strong Buy’ rating, and correlates with our long-term view.
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