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Macy's (M) Beats on Q3 Earnings & Sales, Updates Outlook

Macy's, Inc.M delivered the sixth straight quarter of positive earnings surprise, when it reported third-quarter fiscal 2018 results. Total sales also came ahead of the consensus mark after missing the same in the preceding quarter. Better-than-expected results prompted management to lift earnings view.

The company highlighted that impressive performance across Macy's, Bloomingdale's and Bluemercury brands boosted results. Management hinted that its Growth50 stores initiative is aiding its brick-and-mortar performance. This along with double-digit growth in the digital business bode well. Notably, this Zacks Rank #2 (Buy) stock has rallied 42% year to date, compared with the industry 's gain of 37%.

Let's Delve Deep

Macy's posted adjusted earnings of 27 cents a share that comfortably surpassed the Zacks Consensus Estimate of 14 cents and rose from 21 cents reported in the year-ago period. Earnings gained from solid performance across stores as well as persistent digital growth.

This Cincinnati, OH-based company generated net sales of $5,404 million that surpassed the Zacks Consensus Estimate of $5,379 million and increased 2.3% year over year.

Comparable sales (comps) on an owned plus licensed basis jumped 3.3%, while on an owned basis, comps increased 3.1%. This marked the fourth straight quarter of comps growth for the company. Strategic investments across stores, technology and merchandising are aiding comparable sales growth.

Adjusted EBITDA declined 3.8% to $407 million, while adjusted EBITDA margin contracted 50 basis points to 7.5%.

Macy's, Inc. Price, Consensus and EPS Surprise

Macy's, Inc. Price, Consensus and EPS Surprise | Macy's, Inc. Quote

Other Financial Aspects

Macy's ended the quarter with cash and cash equivalents of $736 million, long-term debt of $5,469 million, and shareholders' equity of $5,667 million, excluding non-controlling interest of $22 million.

FY18 View

Backed by the confidence in its strategic initiatives and solid execution Macy's revised its view for fiscal 2018.

The company now anticipates net sales to increase in the range of 0.3-0.7% compared with the prior guidance of flat to up 0.7%. Comps on an owned plus licensed basis are projected to increase 2.3-2.5% increase compared with the previous guidance of 2.1-2.5% growth. However, the company continues to expect comps on an owned basis to be 20-30 basis points lower than comps on an owned plus licensed basis.

Management now envisions adjusted earnings in the range of $4.10-$4.30 per share for fiscal 2018, up from the prior view of $3.95-$4.15. The Zacks Consensus Estimate for the fiscal year is pegged at $4.03, which is likely to witness upward revision in the coming days.

Check These 3 Trending Picks

Kohl's Corporation KSS delivered an average positive earnings surprise of 10% in the trailing four quarters. It has a long-term earnings growth rate of 6.7% and a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

Target Corporation TGT has a long-term earnings growth rate of 6.7% and a Zacks Rank #2.

Burlington Stores BURL has a long-term earnings growth rate of 20.8% and carries a Zacks Rank #2.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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