Macy's raises annual profit outlook; buys Bluemercury

AP News
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Posted: Feb 03, 2015 6:27 PM
Macy's raises annual profit outlook; buys Bluemercury

NEW YORK (AP) — Macy's Inc. says it expects full-year profits to top estimates as the department store chain announced it has signed an agreement to buy Bluemercury Inc., an upscale beauty retailer.

The Cincinnati retailer also announced a series of executive changes and said that Jeff Gennette, president of Macy's, will be concentrating more of his time on executing broader growth strategies and will be relinquishing his day-to-day responsibilities as chief merchandise officer. Gennette was named president last May. In another appointment, Peter Sachse, Macy's chief stores officers, since 2012, has moved into a new role as the company's chief innovation and business development, overseeing such areas as international expansion and its exploration of an off-price strategy for the Macy's brand announced earlier last month.

Macy's has been a standout among its peers throughout the economic recovery and has reaped the benefits of its strategy of tailoring merchandise to local markets. But it's also grappling with a shift among shoppers who are buying and researching on their mobile devices before they head to the stores.

Against this competitive environment, the company is looking to expand to new areas and bolster its services. It's been testing new services like same-day delivery of products purchased at Macys.com and Bloomingdales.com in eight major U.S. markets. It also launched new shopping apps heading into the holiday shopping season.

Macy's said Tuesday that it's encouraged by the strong holiday season, which represents a strengthening from last year's third quarter and spring season. Terry Lundgren, company's CEO and chairman, noted the solid performance provides a strong foundation to increase sales and earnings going forward.

Macy's now expects earnings per share for the fiscal year to be between $4.35 and $4.37. That's higher than its guidance offered on Jan. 8 that was in the range of $4.25 to $4.35 per share. Macy's is expected to report final results on Feb. 24. Analysts surveyed by FactSet forecast $4.33 per share, on average.

As for Bluemercury, it marks a rare acquisition by Macy's. The Washington, D.C.-based retailer operates about 60 specialty stores in 18 states. The brand will continue to be led by Marla and Barry Beck, who co-founded the company in 1999. Lundgren told The Associated Press on Tuesday that it plans to expand the chain as a stand-alone business but couldn't say how many stores it expects to roll out.

"This is a category we know very well," said Lundgren, noting Macy's plans to use its technology expertise to expand services like buy online and pick up at the store for the Bluemercury brand.

The transaction is expected to be completed in Macy's fiscal first quarter.

Regarding the string of appointments, Lundgren noted they're all about positioning the company for future growth. As part of the promotions, Timothy G. Baxter, previously Macy's executive vice president and general merchandise manager for ready-to-wear, will succeed Gennette as Macy's chief merchandising officer.

Julie Greiner, Macy's chief merchandise planning officer since 2009, will retire from the company in August after a 40-year career with Macy's and its predecessor companies.

Shares of the company slipped 97 cents to $65.10 in after-hours trading. Shares rose nearly 3 percent, or $1.89, to $66.07 in regular trading.

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