Wednesday, August 12, 2009

Macy's Profits Down, Outlook Up

Despite being bogged down with reorganization costs, Macy's, Inc. reported profits that were better-than-expected, and raised their outlook for fiscal year 2009.

The company's second quarter earnings were down to $7M, or $.02 per share, vs. $73M, or $.17 per share, from 2008. However, excluding restructing costs, earnings per share were $.20, still down from the previous year's E.P.S of $.29, but exceeding analysts' estimates of $.17 per share.
"We were able to exceed our expectations with strong earnings and cash flow in the second quarter, despite lower sales in an economic environment that continues to be very difficult," said Terry J. Lundgren, Macy's, Inc. chairman, president and chief executive officer. "In particular, we successfully lowered inventories and managed expenses to align more closely with current levels of business. Our second quarter same-store sales performed as well as or better than most department store retailers even while we were completing the largest organizational transition in Macy's recent history. Most of that transition work is behind us now.
The results from the company's "My Macy's" initiative continue to show promise:
"We continue to be very pleased with results from the My Macy's initiative, which began to roll out to 49 new districts nationwide in the second quarter. Same-store sales performance in the 20 pilot districts launched in 2008 continued to outpace the remainder of the company, and the gap continued to widen in the second quarter. Going forward, we expect the gap to become less meaningful as the 49 new districts launched in 2009 come up to speed and begin producing results that parallel the pilot districts. As previously stated, we expect to see some improvement in these new districts in the fourth quarter of 2009 and especially in spring 2010," Lundgren said.
The first half saw a loss of $.19 per share vs. earnings of $.03 per share in 2008. Minus restructuring costs, EPS was $.04 per share vs. $.28 in the first half of '08.

Sales for the 2nd quarter were down 9.7% to $5.164B from $5.718 in '08. Macy's same-store sales for the quarter dropped 9.5%. Online sales helped the company's 2nd quarter and first half '09 comp sales by 0.5%. Online sales, which count towards same-store sales, rose 9.4% in the 2nd quarter and 12.7% in the first half of fiscal 2009.

The company raise it's guidance on fiscal year 2009 earnings, projecting EPS will be $.70 to $.80 per share, excluding restructuring costs.

Macy's shares closed at $16.40, up 6%.

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