People walk past a Macy’s store in a Manhattan shopping district on August 12, 2020 in New York City.
Spencer Platt | Getty Images
Macy’s reported a surprising profit in the first quarter on Tuesday as stimulus checks and the introduction of the Covid vaccine gave consumers more money and more confidence to return to the mall and refresh their closets.
The department store chain raised its forecast for the full year, saying it saw momentum as consumers hit their stores and buy new outfits online for weddings, travel and other special occasions.
Lately, luggage has been one of the most improved categories year on year, said CEO Jeff Gennette. “Our customer is clearly ready to move on with life.”
Macy’s shares rose 1.7% in premarket trading.
Here’s what Macy’s behaved in the period leading up to May 1, compared to analyst expectations based on refinitive estimates:
- Earnings per share: adjusted 39 cents compared to an expected loss of 41 cents
- Revenue: $ 4.71 billion versus $ 4.37 billion expected
During the quarter, Macy’s posted earnings of $ 103 million, or 32 cents per share, compared to a loss of $ 3.6 billion, or $ 11.53 per share, last year.
Excluding the one-time depreciation and restructuring charges, early debt cancellation, and income tax impact, Macy’s made 39 cents per share. According to a survey by Refinitiv, analysts were looking for a loss of 41 cents.
Net sales increased from $ 3.02 billion a year ago to $ 4.71 billion. This exceeded expectations for $ 4.37 billion in revenue.
In the same period last year, Macy’s sales were down 45% as the Covid pandemic forced stores to temporarily close and shoppers shifted their spending to groceries and cleaning supplies, as well as clothing and shoes.
In the last period, like-for-like sales rose 62.5%, beating FactSet’s estimates for growth of 44.9%.
Sales were partially increased by new customers. Macy’s added 4.6 million customers in the quarter, up 23% from the same period last year. 47% of new shoppers made online purchases.
Digital revenue increased 34% year over year and increased 32% over 2019.
Ecommerce sales accounted for 37% of net sales, a 6 percentage point decrease from the previous year when Macy’s stores closed and the only source of income was digital. But that’s a 13 point improvement over Q1 2019, Macy’s said.
Improved outlook
Americans have recently shown signs that they are ready to return to more normal shopping habits. Apparel and apparel accessories sales rose 727% in April year over year, according to the U.S. Department of Commerce.
Gennette cited the continued strength in categories such as home, fine jewelry and watches, fragrance and luxury items. He said special occasion categories improve as customers start traveling and return to a “pre-pandemic lifestyle”. Macy’s is also investing in newer categories for the company, including toys, health and wellness, and pets, he said.
Macy’s is now calling for fiscal 2021 net sales to be between $ 21.73 and $ 22.23 billion, down from $ 19.75 to $ 20.75 billion.
It is estimated that after adjustments, it will earn between $ 1.71 and $ 2.12 per share. Adjusted earnings of 40 to 90 cents per share were previously expected.
According to Refinitiv, analysts had targeted adjusted earnings of 79 cents per share on sales of $ 20.7 billion.
Macy’s continues to invest in its online business and plans to grow e-commerce sales to $ 10 billion by 2023.
The company, which also owns Bloomingdale’s and beauty chain Bluemercury, is starting testing smaller stores in off-mall locations and is opening more off-price stores known as Macy’s Backstage to appeal to more budget-conscious customers.
At the close of trading on Monday, Macy’s shares were up more than 70% since the start of the year. The retailer has a market cap of $ 6 billion.
The full Macy’s earnings press release is available here.
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