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Efficient merchandising strategy led Macy’s Inc. (M - Analyst Report) – one of the leading department store retailers in the U.S. – to post strong comparable-store sales for the 5-week period ended Feb 2, 2013, which handily surpassed analysts’ expectations.

Comparable-store sales (comps) for this Zacks Rank #3 (Hold) stock jumped 11.7% year over year in Jan 2013. Total sales surged 34.6% to $1.8 billion compared with $1.3 billion in the year-ago period.

With consumers regaining confidence, Jan 2013 was strong on the whole for most retailers, with other players including Kohl's Corp. (KSS - Analyst Report), Nordstrom Inc (JWN - Analyst Report) and Stage Stores Inc. (SSI - Snapshot Report) registering comps growth of over 10%.

For the fourth-quarter of fiscal 2012, Macy’s registered a 7.2% increase in total sales to $9.4 billion, whereas comps witnessed an elevation of 3.9%. Total sales for fiscal 2012 marked an increase of 4.9% year over year to $27.7 billion, while comps increased 3.7%.

Online sales, which include sales from macys.com and bloomingdales.com, surged 48.9% in Jan 2013. For the fourth quarter and fiscal 2012, online sales shot up 47.7% and 41%, respectively. The company remains committed to strengthening the online presence of both its Macy's and Bloomingdale's brands.

Following a robust Jan 2013 performance, the company raised its earnings guidance for fourth quarter and expects earnings to be in the range of $1.94 – $1.99 per share from its earlier guidance of $1.91 – $1.96 per share. The current Zacks Consensus Estimate stands at $1.95 per share for the fourth quarter, which could witness a revision in the coming days.

Apart from efficient merchandising strategies, Macy’s is focusing on closing down underperforming stores and opening stores in regions where it generates healthy sales. The retailer will shutter 6 stores in early spring 2013 and open 9 stores. The company also announced the consolidation of 2 of its stores into 1 in Ridgedale Cente rin Minnetonka by early 2014.

Alongside, to better manage rising costs, the company announced changes to its retirement plans. After incorporating the changes, the company expects to generate EBITDA margin in the range of 14%–15% and forecasts retirement-related expenses to be up $10 million in fiscal 2013 from the prior year level.   

Macy’s has been initiating several strategies to bolster its sales, profitability and cash flow, which include Omnichannel strategy, integration of operations, developing e-Commerce business, and expansion of product offerings.

We remain optimistic about the company’s customer-centric localization initiative called “My Macy’s”. The program aims at improving comparable-store sales and reducing operating expenses, with stores and merchandise assortments focusing on local customer needs and preferences.

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