Published: Wed, May 16, 2018
Business | By Tara Barton

Macy's Takes Off In First Quarter, Profits Soar

Macy's Takes Off In First Quarter, Profits Soar

Shares of NYSE:M traded up $2.82 during midday trading on Wednesday, hitting $32.75. The stock showed a positive performance of 9.56% in the recent trading session at 11:13 a.m. EST.

Macy's, Inc. recently stated first quarter 2018 earnings per diluted share of $0.45, or $0.48 apart from impairment and other costs. At 48 cents, the company's earnings per share were 12 cents higher than the FactSet consensus of 36 cents. However, the company beat that expectation by a wide margin, producing earnings in the amount of $0.48 per share. Comp sales on an owned plus licensed basis are seen rising 1%-2%.

Maybe Macy's Inc. wasn't just coasting on the holiday spirit after all.

Macy's Chairman and CEO Jeff Gennette said in a statement Wednesday that the retailer performed well across all three of its nameplates: Macy's, Bloomingdale's and Bluemercury. "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". She thinks Macy's needs to close more stores than it already has and may have made the most it can from real estate sales.

Gennette, who took over for longtime Macy's CEO Terry Lundgren in March 2017, added that consumer spending remained "healthy" and that there were "significant improvements in global tourism". This was the second straight quarter of same-store sales growth. Dimensional Fund Advisors LP now owns 8,864,888 shares of the company's stock worth $263,642,000 after acquiring an additional 1,064,651 shares in the last quarter.

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The results surpassed Wall Street expectations. The business's quarterly revenue was up 1.8% on a year-over-year basis.

A big driver of the sales increase was a promotional event that shifted into this year's first quarter, compared with last year, when it occurred during the second quarter. Morgan Stanley analysts downgraded Macy's stock last week, writing, "While Macy's has proactively closed stores, ongoing negative store-only comps lead us to question if it is closing them fast enough". Finally, Doyle Wealth Management raised its position in Macy's by 8.9% during the first quarter.

Net income totaled $139 million for the quarter, or 2.5 percent of sales, compared to $78 million, or 1.5 percent of sales, for the same quarter a year ago. Net cash used by financing activities in the first quarter of 2018 was $99 million, contrast with $273 million past year. Finally, BMO Capital Markets raised their target price on shares of Macy's from $38.00 to $42.00 and gave the company an "outperform" rating in a report on Thursday, March 1st.

During the presentation of the results, the department store retailer also announced it will end its joint venture with Chinese Fung Retailing Ltd. The winning formula for Macy's, a healthy brick & mortar business, robust e-commerce and a great mobile experience. This reflects a boost of 20 cents contrast to the prior guidance. Including licensed stores, same-store sales at Macy's rose 4.2%, while analysts expected an increase of 1%.

Total sales in 2018 are predicted by Macy's to climb as much as half a percent.

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