) posted better-than-expected fourth-quarter fiscal 2012 results,
and provided an upbeat guidance for fiscal 2013. The company's
relentless endeavors to keep itself on the growth trajectory have
paid off in an economy, which still lacks luster.
The quarterly earnings of $2.05 per share beat the Zacks
Consensus Estimate of $1.98, and surged 20.6% from $1.70 earned
in the prior-year quarter on the back of My Macy's localization
initiatives, omnichannel integration, robust online sales and
effective cost management. The earnings also came ahead of the
previously provided guidance range of $1.94 to $1.99 per
The Cincinnati, Ohio-based Macy's said that total sales grew
7.2% to $9,350 million in the quarter from $8,724 million in the
year-ago period, and came ahead of the Zacks Consensus Estimate
of $9,327 million. Comparable-store sales for the quarter climbed
Online sales, which include sales from macys.com and
bloomingdales.com, continued to show growth momentum. For the
quarter, online sales soared 47.7%. Online sales favorably
impacted comparable-store sales by 3.3%. The company seeks to
expand both Macy's and Bloomingdale's brands online.
Despite a 7.8% increase in cost of sales, gross profit in the
quarter climbed 6.2% to $3,796 million, aided by top-line growth,
however, gross profit margin contracted 40 basis points to 40.6%.
Adjusted operating income jumped 10.9% to $1,396 million, whereas
operating margin expanded 50 basis points to 14.9%.
Macy's during fiscal 2012 opened 7 outlets - 2 Macy's outlets
opened in Salt Lake City and Greendale, 5 Bloomingdale's Outlet
stores in Livermore, Merrimack, Garden City, Grand Prairie and
Dallas. The company during the fiscal year also closed 8
locations: in Pasadena, Belmont, Honolulu, St. Paul, and
The company closed a Macy's furniture clearance center in
Houston; whereas Macy's men's and home store in Santa Ana was
closed and merged with the main store. The company also closed
Bloomingdale's Home Store in Las Vegas.
During fiscal 2013, the company plans to open Macy's stores in
Victorville and Gurnee, and a Macy's Men's Store in Las Vegas.
The company will open a new Macy's in Bay Shore to substitute the
old. A new Bloomingdale's store will be opened in Glendale and a
new Bloomingdale's Outlet store in Rosemont.
Other Financial Aspects
Macy's ended fiscal 2012 with cash and cash equivalents of
$1,836 million, long-term debt of $6,806 million, reflecting a
debt-to-capitalization ratio of 52.9% and shareholders' equity of
Macy's has been actively managing its cash flows, returning
much of its free cash to shareholders via dividends or share
repurchase activity, while maintaining a healthy balance sheet
and credit ratios that are necessary for an investment-grade
rating. The share repurchases and dividend increasing strategies
not only enhance shareholders' return but also raise the market
value of the stock.
During fiscal 2012, the company paid dividend of $324 million
and repaid debt of $1,803 million. The company bought back
approximately 35.6 million shares, aggregating about $1,350
million. The company at its disposal had approximately $1,502
million of share repurchase authorization remaining as of Feb 2,
Macy's generated net cash flow of $2,261 million from
operating activities in fiscal 2012 compared with $2,093 million
in the year-ago period.
Strolling Through Guidance
Buoyed by Macy's healthy results management projects fiscal
2013 earnings between $3.90 and $3.95, which lies ahead of the
current Zacks Consensus Estimate of $3.81. The company expects
comparable-store sales growth of 3.5% for the fiscal year and
forecasted capital expenditures of $925 million.
The U.S. economy is still not fully recovered. Amid such a
scenario, Macy's has been moving on and keeping its upbeat note.
The company's sound fundamentals across its Macy's and
Bloomingdale's business are mirrored through strong fourth
quarter results, and management believes that it will sustain the
same momentum going forward.
In an attempt to increase sales, profitability and cash flows,
the company has been taking steps such as integration of
operations, consolidation of divisions, customer-centric
localization initiatives, as well as developing e-commerce
business and online order fulfillment centers. Moreover, Macy's
continues to focus on price optimization, inventory management
and merchandise planning to drive traffic.
However, the company's expansion in regions where it already
serves could cannibalize its sales performance and bring down
traffic counts at its existing stores in these areas.
Consequently, this may have a negative impact on the company's
overall performance. Moreover, a sluggish economic recovery and
erratic consumer behavior remain causes for concern.
Macy's department stores sell a wide range of merchandise. Its
products include men's, women's and children's apparel and
accessories, cosmetics, home furnishings and other consumer
Currently, Macy's holds a Zacks Rank #3 (Hold), and we could
witness an upward revision in the rank in the coming days. There
are other stocks worth considering in the non-food retail,
wholesale sector. This includes
), which holds a Zacks Rank #1 (Strong Buy) and is expected to
continue with its upbeat performance. Other stocks that should
be merited include
American Eagle Outfitters, Inc.
) both carry a Zacks Rank #2 (Buy).
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