Macy's stock rises as sales beat views, thanks to Bloomingdale's and Bluemercury

By Tomi Kilgore

Profit per share was less than half what it was last year but still beat Wall Street forecasts by a wide margin

Shares of Macy's Inc. were headed higher Tuesday, after the department store chain reported fiscal first-quarter results that fell from a year ago but that beat expectations, helped by strength in its luxury store chains, Bloomingdale's and Bluemercury.

And while overall same-store sales fell from a year ago for an eighth straight quarter, Bloomingdale's branded stores saw sales turn higher and Bluemercury sales increased for a 13th straight quarter.

"We are reading and reacting to the dynamic economic environment and competitive promotional landscape in real time," said Chief Executive Tony Spring, according to an AlphaSense transcript of the post-earning conference call. "Regardless of income tier, we know our customer responds to fashion newness and compelling price points and an engaging environment."

The stock (M) rose 0.9% in morning trading, but pared earlier gains of as much as 5.1%.

Net income for the quarter to May 4 declined to $62 million, or 22 cents a share, from $155 million, or 56 cents a share, in the same period a year ago.

Excluding nonrecurring items, adjusted earnings per share fell to 27 cents from 56 cents but was well above the FactSet consensus of 16 cents.

Net sales fell 2.7% to $4.85 billion, the eighth-straight quarter of declines, but was just above the FactSet consensus of $4.82 billion.

Same-store sales, which are generally sales of locations open at least a year, were down 1.2%, or less than the FactSet consensus for a 3.1% decline.

Same-store sales of Macy's branded stores were down 1.6%, while sales at Bloomingdale's stores increased 0.8% and at Bluemercury stores were up 4.3%.

"Turning to luxury, Bloomingdale's and Bluemercury continue to be bright spots within our portfolio," CEO Spring said.

Gross margin was down to 39.2% from 40%, due primarily to additional discounting for slower-moving warm weather products, which offset a decline in delivery expenses.

The value of merchandise inventories as of May 4 was $4.69 billion, up 1.7% from a year ago.

"Our customers across all three nameplates continue to benefit from strong wage and job growth. However, inflationary pressures persist and they're felling that pinch," Spring said. "The outlook provided on our fourth quarter earnings call as well as today's update assumes our customers will continue to carefully scrutinize their discretionary purchases."

For fiscal 2024, Macy's revised it full-year guidance ranges for adjusted EPS to $2.55 to $2.90 from $2.45 to $2.85 and for net sales to $22.3 billion to $22.9 billion from $22.2 billion to $22.9 billion.

Gross margin is expected to be 39% to 39.3%, compared with 38.8% in 2023, as increased full-price and private-brand sales is partially offset by higher discounts of warmer-weather spring products.

The stock has slipped 4.2% year to date, while the SPDR S&P Retail ETF (XRT) has gained 4.4% and the S&P 500 has advanced 11.3%.

-Tomi Kilgore

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05-21-24 0958ET

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