It was revealed on Wednesday that Macy's (NYSE:
) has reported first quarter profits that have leaped up 38%,
thanks in no small part to its recent move to tailor fashions to
That 38% did manage to beat Wall Street expectations, which
are still understandably low following a dreadful retail climate.
Still, the company's shares fell a disappointing 5% in Wednesday
morning trading and now, investors are worried.
Macy's net income shot up to $181 million, or 43 cents per
share, for the quarter ending April 28, up from $131 million, or
30 cents per share, a year ago. Meanwhile, revenue rose 4.3% to
$6.14 billion, up significantly from $5.89 billion the previous
Any time we see impressive increases in net income and revenue
from retail giants like Macy's, experts and analysts start asking
if the economic disaster is over, if the fact that people are
spending money on clothes perfumes and home goods means that all
ios well again.
That's fair enough, if naïve. But Macy's does need to be
commended for the brave marketing strategy that saw them direct
goods at specific geographic locations. The company's people did
their research, found out what was popular where, and then went
with the results. That approach has proven to be successful.
"The momentum in our business at Macy's and Bloomingdale's
continued to build in the first quarter, with sales and earnings
exceeding our expectations going into the year," Terry J.
Lundgren, Macy's chairman, president and CEO, said in a
statement. "The quarterly data clearly demonstrates the strength
of our results as we continue to implement our strategies."
Lundgren has every right to be delighted, and if he has other
clever strategies up his sleeve, as he implies, then it'll be
fascinating to see what they are and how they play out.
Consumer spending accounts for 70% of the U.S.'s economic
activity and, with Macy's being the first of the major retailers
to report earnings, the government will be hoping that the
much-improved results mark a trend that is set to continue.
(c) 2012 Benzinga.com. Benzinga does not provide investment
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