Macy’s profit surges in second quarter
Profit surged at Macy’s Inc. in the second quarter, thanks to continued payoff from several changes within the company, including more locally tailored merchandise and new exclusive brands that led to robust sales at the department store giant.
Chief Executive Terry J. Lundgren said Wednesday that although the economic environment remained uncertain, the company “is beginning to hit its stride” after implementing structural and organizational changes over the last two years.
“The improvement in our business is not the result of a single factor,” he said. “Rather, our performance reflects a number of strategic initiatives that are working successfully and complementing each other.... We are entering the fall season with tremendous momentum.”
For the three months that ended July 31, Macy’s reported profit of $147 million, or 35 cents a share, compared with profit of $7 million, or 2 cents, for the year-earlier quarter, which included 18 cents a share in restructuring-related charges. Analysts surveyed by Thomson Reuters had forecast earnings of 29 cents a share.
Sales totaled $5.54 billion, a 7.2% increase from the second quarter of 2009, the Cincinnati company said. At stores open at least a year — known as same-store sales and considered an important measure of a retailer’s health — sales were up 4.9%.
Online sales at Macys.com and Bloomingdales.com combined were up 28.1% in the second quarter and 31% in the first half of 2010, continuing the trend of double-digit online sales growth that many major retailers have seen recently.
“It was a clean quarter and it was a good quarter,” said Bill Dreher, senior retail analyst at Deutsche Bank Securities. “They really do seem to be gaining some traction from the My Macy’s [local merchandising] initiative, and that seems to be what’s driving the better sales numbers.”
Shares of Macy’s rose $1.14, or 5.9%, to $20.52.
The results led Macy’s to increase its full-year earnings outlook to $1.85 to $1.90 a share, up from its previous estimate of $1.75 to $1.80.
The company also said it now expects same-store sales in the second half of fiscal 2010 to be up in the range of 3% to 3.5%, which would result in a 4% to 4.2% increase in full-year same-store sales.
Macy’s kicked off the second-quarter earnings period for major retailers, with Kohl’s Corp. and Nordstrom Inc. scheduled to report their results Thursday.
Despite the better-than-expected results for Macy’s, Dreher noted that typically the second quarter “is not a big deal at all” in the retail calendar and that much of Macy’s earnings will need to come in the second half of the year, especially around Christmastime.
“The year is far from in the bag,” he said. “They still need to continue to perform very well.”
andrea.chang@latimes.com
