Shares of Macy’s Inc. (M) surged by 8.3% in premarket trading on Thursday, hitting a three-month high. The department store chain delighted investors with a significant fiscal third-quarter profit beat and an upward revision of its full-year outlook. Macy's attributed this success to a "refined" gift assortment and "simplified" promotions.
Financial Performance
For the quarter ending October 28, Macy's reported a net income of $43 million, or 15 cents per share. This is a decline from $108 million, or 39 cents per share, in the same period last year. However, after excluding nonrecurring items, adjusted earnings per share stood at 21 cents—outperforming the FactSet consensus of breakeven.
Despite a 7.1% drop in sales to $4.86 billion, Macy's managed to surpass the FactSet consensus of $4.78 billion. Furthermore, same-store sales fell by only 7.0%, beating expectations of a 7.2% decline. Results varied across Macy's branded stores (same-store sales down 7.6%), Bloomingdale's (down 3.2%), and Bluemercury (up 2.5%).
Margin Improvements and Inventory Management
The company saw an improvement in gross margin, rising to 40.3% from 38.7%. Additionally, the value of merchandise inventories experienced a notable decline of 5.9%, amounting to $6.03 billion.
Upgraded Guidance
Despite recent challenges, Macy's is optimistic about its future performance. For fiscal year 2023, the company revised its adjusted earnings per share guidance range to $2.88 to $3.13, compared to the previous range of $2.70 to $3.20.
Market Performance
Over the past three months, Macy's stock has dipped by 16.5%, contrasting with the S&P 500's 2.2% gain during the same period.
Macy's strong Q3 results and improved outlook indicate a positive trajectory for the renowned department store chain. With a refined gift assortment and simplified promotional strategy, the company is well-positioned for future growth.
