Holiday spending pushes Macy's 4Q profit higher

AP News
Posted: Feb 21, 2012 5:42 PM
Holiday spending pushes Macy's 4Q profit higher

A strong holiday shopping season and hearty online sales pushed Macy's Inc.'s fourth quarter net income up 12 percent. That topped Wall Street's expectations, and the department store chain's stock hit a 52-week high.

Macy's, which runs upscale Bloomingdale's as well as Macy's stores, has been outperforming mid-price peers such as Kohl's Inc. and J.C. Penney Co., which will report their quarterly results on Thursday and Friday, respectively.

Chairman, President and CEO Terry Lundgren called the holiday season "terrific" in a statement. The company's success over the holidays was crucial because the season can account for as much as 40 percent of a retailer's annual revenue. The company also is reaping the benefit of tailoring its merchandise to local markets and locking up more exclusive brands.

Macy's shares rose 44 cents, or 1.21 percent, to close at $36.69 Tuesday. They earlier touched a fresh 52-week high of $38.22.

Macy's said it earned $745 million, or $1.74 per share, for the period that ended Jan 28. A year earlier, it earned $667 million, or $1.55 per share.

Excluding gains from the sale of store leases related to the 2006 sale of Lord & Taylor and expenses tied to some store closings, the company reported adjusted earnings of $1.70 per share.

Revenue rose 5.5 percent to $8.72 billion from $8.27 billion, with sales climbing across all regions.

That topped the average expectations of analysts, who predicted adjusted earnings of $1.65 per share and revenue of $8.7 billion, according to FactSet.

While addressing needs on the local level is resonating with shoppers, so is the company's Internet presence. Fourth-quarter sales rose 40 percent at the Macy's and Bloomingdale's websites combined.

Chief Financial Officer Karen Hoguet said during a conference call that overall sales were strongest in shoes, handbags, watches, cosmetics and fragrances and men's wear. The unseasonably warm weather dampened sales of cold-weather merchandise, but juniors and casual women's clothing sales also were weak.

Revenue at stores open at least a year, which includes online sales, climbed 5.2 percent. That comparison is a key indicator of a retailer's health because it excludes stores that recently opened or closed.

For the year, Macy's earned $1.26 billion, or $2.92 per share, up from $847 million, or $1.98 per share, the previous year. Adjusted earnings were $2.88 per share.

Full-year revenue increased 5.6 percent to $26.41 billion from $25 billion. Revenue at stores open at least a year increased 5.3 percent.

The company, which has corporate offices in Cincinnati and New York, expects fiscal 2012 earnings of $3.25 to $3.30 per share. Wall Street predicts $3.27 per share.

Macy's also anticipates its online sales will surpass $2 billion in 2012 and that revenue at stores open at least a year will climb about 3.5 percent.

Macy's operates about 840 stores in 45 states and Washington, D.C., Guam and Puerto Rico.