) posted lower-than-expected second-quarter fiscal 2013 results
as consumers' cautious attitude on making any discretionary
purchases resulted in soft sales. Moreover, discounts offered
also hurt margins. As a result, this Zacks Rank #4 (Sell) stock
trimmed its comparable sales and earnings outlook.
The quarterly earnings of 72 cents a share missed the Zacks
Consensus Estimate of 78 cents, thereby sending the shares down
3.6% or $1.72 to $46.78 during pre-market trading hours. However,
the quarterly earnings registered a year-over-year growth of
Total sales of the Cincinnati, Ohio-based Macy's edged down
0.8% to $6,066 million in the quarter from $6,118 million in the
year-ago period, and fell short of the Zacks Consensus Estimate
of $6,246 million. Comparable-store sales for the quarter also
Going forward, management remained optimistic of capturing
back-to-school season opportunities with its fresh inventory
along with My Macy's localization initiatives, omnichannel
integration and Magic Selling.
Gross profit in the quarter fell 1.2% to $2,533 million, while
gross profit margin shriveled 10 basis points to 41.8%. Operating
income tumbled 3.6% to $534 million, whereas operating margin
contracted 30 basis points to 8.8%.
Other Financial Aspects
Macy's ended the quarter with cash and cash equivalents of
$1,424 million, long-term debt of $6,339 million, reflecting a
debt-to-capitalization ratio of 52% and shareholders' equity of
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
During the quarter, the company bought back approximately 9.2
million shares for about $446.7 million. So far in the fiscal
year, the company has repurchased about 17.5 million shares of
worth approximately $806.5 million. Macy's still has $2.2 billion
remaining at its disposal as of Aug 3, under its share repurchase
Macy's generated net cash flow of $664 million from operating
activities in the first half of fiscal 2013 compared with $638
million in the year-ago period.
Strolling Through Guidance
Following soft second quarter results, Macy's now anticipates
comparable-store sales growth of 2.5% to 4% in the second half of
2013. For fiscal 2013, comps growth is projected between 2% and
2.9%. Management now forecasts full year earnings in the band of
$3.80 to $3.90 per share.
Earlier, Macy's had envisioned comps growth of 3.5% and
earnings between $3.90 and $3.95 per share for the fiscal
The current Zacks Consensus Estimate for the year is $3.95 per
share. With Macy's lowering its earnings guidance, we could
witness a downward trend in the Zacks Consensus Estimate in the
Other Stocks to Consider
Until any further upgrade in Macy's Zacks Rank, other well
performing stock in the retail sector include
Jack in the Box Inc.
), all of which carry Zacks Rank #1 (Strong Buy).
HANESBRANDS INC (HBI): Free Stock Analysis
HHGREGG INC (HGG): Free Stock Analysis Report
JACK IN THE BOX (JACK): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
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