Macy’s Inc. (M) – one of the leading department store retailers in the U.S.– posted healthy comparable-store sales for the five-week period ended December 29, 2012, which marginally came ahead of analysts’ expectations.
Comparable-store sales increased 4.1% year over year for the month of December, as the company witnessed strong online sales. Total sales increased 3.6% to $5.10 billion compared with $4.92 billion in the year-ago period.
For the combined November and December 2012 period, comparable-store sales marked an increase of 2.5%. Year-to-date, Macy’s sales augmented 3.3% to $25.9 billion compared with $25.1 billion in the comparable prior-year period, whereas comps witnessed an elevation of 3.3%.
Online sales, which include sales from macys.com and bloomingdales.com, surged 51.7% in December 2012. On a year-to-date basis, online sales shot up 40.4% from the comparable year-ago period. The company remains committed to strengthening the online presence of both its Macy's and Bloomingdale's brands.
Management stated that sales for the first two months of the fourth quarter remained below expectations as results were dampened by the impact of Hurricane Sandy and lingering economic concerns. Consequently, the company now expects same-store sales to increase between 3% and 3.5% for the fourth quarter of 2012, down from its earlier forecast of 4.2%. Moreover, the company lowered its earnings guidance in the range of $1.91 – $1.96 from $1.94 – $1.99 per share. The current Zacks Consensus Estimate stands at $1.98 per share for the fourth quarter.
In a separate story, Macy’s announced that it will be closing down underperforming stores and open stores in regions where it generates healthy sales. The retailer will shutter 6 stores in early spring 2013 and open 9 stores. The company also announced the consolidation of two of its stores into one in Ridgedale Center in Minnetonka by early 2014.
Macy’s has been initiating several strategies to bolster its sales, profitability and cash flow, which include Omnichannel strategy, integration of operations, , developing e-commerce business, and expansion of product offerings.
We remain optimistic about the company’s customer-centric localization initiative called “My Macy’s.” The program aims at improving comparable-store sales and reducing operating expenses, with stores and merchandise assortments focusing on local customer needs and preferences.
Macy’s, which competes with J. C. Penney Company Inc. (JCP), Dillard’s Inc. (DDS) and Saks Incorporated (SKS), currently operates approximately 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico.
Currently, we have a long-term ‘Neutral’ recommendation on the stock. However, Macy’s holds a Zacks #3 Rank that translates into a short-term ‘Hold’ rating.
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