) emerged strong through the holiday season, which appeared to be
a tough one. Comparable-store sales for the November and December
period collectively jumped 3.6%, while including departments
licensed to third parties, it rose 4.3%. Shares of this
department store operator climbed 5.3% or $2.75 to $54.59 during
after-market trading hours.
My Macy's localization initiatives, omnichannel integration,
Magic Selling and promotional strategies were the driving factors
behind the sturdy performance amid a soft economic environment.
We believe Macy's sustained focus on price optimization,
inventory management, merchandise planning and private label
offering are the primary catalysts driving traffic, facilitating
in meeting customer-oriented demand and improving in-store
Surprisingly, Macy's narrowed its comparable-store sales
guidance for the second half of 2013 to a range of 2.8% to 2.9%.
Earlier, the company had projected comps growth of 2.5% to 4% for
the said period. Management now anticipates comps to increase
between 2.3% and 2.5% during the fourth quarter, while in a band
of 2.2% to 2.3% for fiscal 2013.
However, Macy's reiterated its fiscal 2013 earnings guidance
of $3.80 to $3.90 per share, giving some reprieve to investors
after narrowing its comps outlook. The company also initiated its
fiscal 2014 guidance, citing comps growth of 2.5% to 3%, and
envisions earnings between $4.40 and $4.50 per share.
The Zacks Consensus Estimate for fiscal 2013 and 2014
currently stands at $3.87 and $4.39 per share.
In an attempt to increase sales, profitability and cash flows,
the company has been taking steps such as integration of
operations, consolidation of divisions as well as developing
e-commerce business and online order fulfillment centers.
Concurrent with the comps results, Macy's announced certain
cost containment initiatives and changes in the organizational
structure. The company is creating a North Central Region by
merging the Midwest Region and the North Region. The company is
also lowering the number of districts to 60 from 69 by
consolidating the nine existing stores districts with nearby
districts. The company also intends to eliminate district planner
role for home categories. The company is also focusing on
lowering expenses across central office, administrative and
Macy's hinted that these organizational changes will result in
2,500 job cuts but added that new positions will be created for
its online operations, direct-to-consumer fulfillment and new
stores. The company, which currently operates 840 department
stores, now plans to open five new outlets under the Macy's
brand, while 3 new stores under its Bloomingdale's banner, and
expects to shutter 5 Macy's stores in early spring 2014.
Management believes these initiatives would result in cost
savings of $100 million per year. Alongside it added that the
company would incur charges of $120 million to $135 million
during the fourth quarter.
Other Stocks Worth Considering
Macy's currently holds a Zacks Rank #2 (Buy). Other better
ranked stocks in the retail sector include
Bon-Ton Stores Inc.
G-III Apparel Group, Ltd.
) both carrying a Zacks Rank #1 (Strong Buy), and
Michael Kors Holdings Limited
) sporting a Zacks Rank #2 (Buy).
BON-TON STORES (BONT): Get Free Report
G-III APPAREL (GIII): Free Stock Analysis
MICHAEL KORS (KORS): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
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