) posted first-quarter fiscal 2014 results, wherein earnings of 60
cents a share came a penny ahead of the Zacks Consensus Estimate,
and rose 9% from 55 cents earned in the prior-year quarter.
Effective cost management and share repurchase activity provided
cushion to the bottom-line.
Shares rose 2.4% to $59.23 during
However, total sales of this Cincinnati, Ohio-based company
tumbled 1.7% to $6,279 million in the quarter from $6,387 million
in the year-ago period, and also fell short of the Zacks Consensus
Estimate of $6,460 million. Adverse weather conditions and calendar
shift for its major event hurt the company's sales. The company
witnessed softness in business trends from January through March,
with signs of improvement only seen from April.
Comparable-store sales for the quarter declined 1.6%, while
including sales generated from third party licensed departments,
comparable sales fell 0.8%.
Despite a top-line decline, management reaffirmed its outlook
counting on the company's strong fundamentals. My Macy's
localization initiatives, omnichannel integration and promotional
strategies still remain the driving factors.
Gross profit in the quarter declined 1.3% to $2,443 million,
whereas gross profit margin increased 10 basis points to 38.9%.
Operating income grew 1.8% to $443 million, whereas operating
margin expanded 30 basis points to 7.1%.
As a part of its mall redevelopment project, Macy's during the
quarter merged 2 outlets in the same mall in Houston, TX into
Other Financial Aspects
Macy's ended the quarter with cash and cash equivalents of
$1,878 million, long-term debt of $6,722 million, and shareholders'
equity of $6,100 million.
Macy's has been actively managing its cash flow, 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.
During the quarter, the company bought back approximately 7.4
million shares for about $432 million. The company's board also
increased the share buyback authorization by $1.5 billion, thereby
bringing the total authorization to $2.5 billion at the end of the
first quarter on May 3, 2014. Since the recommencement of share
buyback activity in August 2011, the company had repurchased about
93 million shares for approximately $3.9 billion through May 3,
Macy's also hiked its quarterly dividend by 25% to 31.25 cents.
The increased dividend will be paid on July 1, 2014, to
shareholders of record as of June 13, 2014.
The company generated net cash flow of $86 million from
operating activities in the quarter compared with $298 million in
the prior year.
Strolling Through Guidance
Management continues to anticipate comparable-store sales growth
of 2.5% to 3% in fiscal 2014. Macy's maintained full-year earnings
projection of $4.40 to $4.50 per share. The current Zacks Consensus
Estimate for the fiscal year is $4.47 per share.
Other Stocks to Consider
Currently, Macy's holds Zacks Rank #3 (Hold). Other well
performing stock in the retail sector include
Columbia Sportswear Co.
) all sporting a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
COLUMBIA SPORTS (COLM): Free Stock Analysis
HANESBRANDS INC (HBI): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
V F CORP (VFC): Free Stock Analysis Report
To read this article on Zacks.com click here.