Macy’s is turning retail’s frown upside down!
Macy’s Inc. had some good news for the retail naysayers, reporting Q1 earnings that blew away estimates. Net sales in the first quarter of 2018 totaled $5.541 billion, an increase of 3.6%, compared with sales of $5.350 billion in the first quarter of 2017. The company’s 2018 earnings per diluted share was $0.45, or $0.48 excluding impairment and other costs (compared to $0.26 per share in the first quarter of 2017 for both reported and adjusted diluted EPS). Macy’s also reported comparable sales on an owned basis that were up 3.9% in the first quarter of 2018 compared to the first quarter of 2017. On an owned plus licensed basis, comparable sales were up 4.2% for the first quarter of 2018.
The market reacted accordingly. Macy’s stock rose nearly 10% in pre-market trading. Retail Dive reported that Macy’s comps were more than three percentage points higher than the FactSet consensus of 0.7%, cited by MarketWatch, and top-line sales were more than $10 million higher than the FactSet consensus of $5.43 billion. At 48 cents, the company’s earnings per share were 12 cents higher than the FactSet consensus of 36 cents.
This turnaround news comes on the heels of Macy’s acquiring experiential retailer STORY, betting on Rachel Shechtman’s proven experience to innovate retail.
“Macy’s, Inc.’s results for the first quarter of 2018 reflect continuing momentum in the business. We exceeded our expectations and saw strong performance across all three brands—Macy’s, Bloomingdale’s, and Bluemercury—as well as across all geographic regions and families of business. We are maintaining a healthy inventory position, which helped us deliver improved gross margin,” said Jeff Gennette, Macy’s, Inc. chairman and chief executive officer. “The winning formula for Macy’s, Inc. is a healthy brick & mortar business, robust e-commerce and a great mobile experience. While we have more work to do, the continuing improvement in our stores is encouraging and we once again achieved double-digit growth in the digital business. 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.”
“Our first quarter performance reflects solid execution of our North Star Strategy, including merchandising and marketing activities. We also saw continued healthy consumer spending and significant improvements in international tourism. Taken together, these positive factors give us confidence to raise both our sales and earnings guidance for the fiscal year,” continued Gennette. “Heading into the second quarter, we are intensely focused on laying the foundation for our 2018 strategic initiatives to support improved performance in the back half of the year.”