) posted better-than-expected first-quarter fiscal 2013 results
and maintained its guidance for fiscal 2013. The company's
relentless endeavors to keep itself on the growth trajectory have
paid off despite the lackluster economy.
The quarterly earnings of 55 cents a share surpassed the Zacks
Consensus Estimate of 53 cents and surged 28% from 43 cents
earned in the prior-year quarter on the back of My Macy's
localization initiatives, omnichannel integration and effective
Total sales of the Cincinnati, Ohio-based Macy's grew 4% to
$6,387 million in the quarter from $6,143 million in the year-ago
period, and came ahead of the Zacks Consensus Estimate of $6,380
million. Comparable-store sales for the quarter climbed 3.8%.
Gross profit in the quarter rose 3.8% to $2,476 million, aided
by top-line improvement, while gross profit margin remained flat
at 38.8%. Operating income jumped 11.3% to $435 million, whereas
operating margin expanded 40 basis points to 6.8%, reflecting
lower SG&A expenses as a percentage of sales.
Other Financial Aspects
Macy's ended the quarter with cash and cash equivalents of
$1,752 million, long-term debt of $6,797 million, reflecting a
debt-to-capitalization ratio of 53.2% 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
rating. The share repurchases and strategies to increase dividend
not only enhance shareholders' return but raise the market value
of the stock.
During the quarter, the company raised its quarterly dividend
to 25 cents per share from 20 cents per share. The increased
dividend will be paid on Jul 1, 2013, to shareholders of record
on Jun 14, 2013.
Moreover, the company increased its share repurchase
authorization by $1.5 billion, bringing the remaining
authorization outstanding to $2.6 billion as of May 4, 2013.
Since Aug 2011, the company has repurchased roughly $2.2 billion
worth of shares through May 4, 2013.
Macy's generated net cash flow of $298 million from operating
activities in the first quarter compared with $265 million in the
Strolling Through Guidance
Buoyed by healthy results, Macy's stood by its earlier
guidance and projects fiscal 2013 earnings between $3.90 - $3.95.
The company expects comparable-store sales growth of 3.5% for the
current fiscal year.
The U.S. economy is yet to recover completely. Despite such a
dismal scenario, Macy's has been progressing on an upbeat note.
The company's sound fundamentals across its Macy's and
Bloomingdale's business are mirrored through strong first-quarter
results. Alongside, management believes that it will sustain the
same momentum going forward.
In an attempt to increase sales, profitability and cash flow,
the company has been taking steps such as integration of
operations, consolidation of divisions, customer-centric
localization initiatives, as well as developing its 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 count 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 concerns.
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
During the first quarter, Macy's opened 1 new store in
Victorville, Calif. and operates through 840 department stores
across 45 states. Moreover, Macy's operates 12 Bloomingdale's
Currently, Macy's holds a Zacks Rank #3 (Hold), and we could
witness an upward revision in the rank in the coming days.
Other Stocks to Consider
Until any further upgrade in Macy's Zacks Rank, the other well
performing stock in the non-food retail, wholesale sector
Big 5 Sporting Goods Corp
), which carries a Zacks Rank #1 (Strong Buy).
The Gap, Inc
The Buckle, Inc
), both of which carry a Zacks Rank #2 (Buy) are also worth
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MACYS INC (M): Free Stock Analysis Report
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