Macy’s Inc. raised its guidance after a strong first quarter performance, which it attributed to a continued tailwind from Q4, better merchandising and the new loyalty program.
In a Nutshell: Macy’s Inc. reported that it’s riding a wave of consumer spending that began in the fourth quarter. The company has also benefited from a “significant improvement” in international tourism spending. Macy’s reported strong sales in all geographical regions and particular strength in jewelry and “standout” performances in men’s tailored, kids’, dresses, activewear and home. The company also recognized and uptick in accessories, handbags and sleepwear, which it attributed to its private brands.
The retail group also credited the new Macy’s loyalty program with stoking sales among its strongest fans. That coupled with a focused merchandising strategy led the company to an average unit retail increase of 5 percent over the same period last year.
As a result of the strong quarter, the company has raised its full year guidance by 20 cents. It now expects an adjusted earnings per diluted share of $3.75 to $3.95. Sales are anticipated to fall between a 1 percent decline and a 0.5% increase. Comp sales are expected to be up 1 percent to 2 percent.
Sales: Net sales for the first quarter hit $4.5 billion, which represented a 3.6% boost over the $5.4 billion the company brought in in 2017. Comparable stores sales were up 3.9% during the period over the same time last year. The company attributed much of the year-on-year gains to moving its Friends and Family promotion from the second quarter of 2017 to the first quarter this year.
Earnings: Macy’s reported net income of $139 million, or 2.5% of sales, up from $78 million, or 1.5% of sales for the first quarter of 2017.
CEO’s Take: “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. “Our best customer is responding well to the improvements we’ve made to her experience in our stores, on dot com and through the Macy’s app.”