Macy's Crushes Estimates With Big Revenue And Earnings Growth

By Sam Lewis

After bleak second-quarter, world-famous retailer seems to have hit its stride entering the holiday shopping season

After lowering its year-end guidance in the second-quarter of 2013, Macy’s rebounded nicely in the third-quarter. Boasting increases in both revenue and profits, Macy’s credits its approach to marketing for its quarter-by-quarter turnaround.

For the quarter, Macy’s reports revenue of $6.28 billion which beats analysts’ consensus of $6.18 billion. This marks an increase of 3.3 percent against 2012’s third-quarter. Macy’s third-quarter income came in at $177 million, or 47 cents per share. This figure marks a 31 percent increase against the same time last year, and crushes Wall Street’s prediction of 38 cents per share. Comparable sales — including net sales from stores open at least one year and online sales from macys.com and bloomingdales.com — were up 3.5 percent in the third-quarter, beating 2012’s Q3 figure by more than a full percent. Macy’s CEO, Terry Lundgren, is pleased with Macy’s results given what he is calling a “tepid economic climate.” Lundgren credits the increases in revenue and profit to Macy’s marketing efforts. “Business in the third quarter benefited from intensified marketing strategies to emphasize the value in our merchandise deliveries,” says Lundgren.

Despite the successes in the third-quarter, Macy’s did not raise its guidance for the remainder of 2013. Macy’s says comparable sales are expected to increase anywhere from 2.5 percent to 4 percent in 2013’s second-half, and somewhere between 2 percent to 2.9 percent for all of 2013. The company is also expecting 2013’s full-year earnings to fall in the range of $3.80 to $3.90 per share.

Based on the strength of the third-quarter, especially in October, Macy’s expects to perform well in the fourth-quarter. “Our business improved during the quarter, with particular strength in October, so we are entering the fourth quarter with confidence,” Lundgren says. The remainder of the year will be driven by the retailer’s wide selection of in-demand designers and brands. Supporting that demand will be 83,000 seasonal workers, specifically hired for the holiday shopping season. This year, spending on holiday shopping is expected to be boosted, which should also give Macy’s a bit more confidence. Brian Yarbrough, an analyst with Edward Jones, praises Macy’s merchandise selection, along with leveraging brick-and-mortar stores to fulfill online orders. “They're in good shape,” Yarbrough says. “Unless something changes abruptly in consumer sentiment, they should have a great holiday season.”

Check out how Millenials are affecting holiday shopping

                Are you a retailer that wants to publish your opinion?

                Contact us to become part of our Editorial Community.