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Macy's (M) Q2 Earnings Top, Sales Miss Pushes Stock Down
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Macy’s, Inc. (M - Free Report) delivered the fifth straight quarter of positive earnings surprise, when it reported second-quarter fiscal 2018 results. However, total sales fell short of the consensus mark after a beat in the preceding quarter. With this, the company delivered negative sales surprise in three of the last four quarters.
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 growth at its brick-and-mortar stores. This along with robust e-commerce and mobile-commerce bode well for the company.
Confidence in its strategic initiatives, solid execution and a robust consumer spending environment has prompted this U.S. department store chain to lift the sales and earnings view for fiscal 2018. However, the market punished the stock probably on the soft sales performance, sending shares down 5.5% during pre-market trading hours. Nonetheless, this Zacks Rank #2 (Buy) stock has rallied 66% year to date, compared with the industry's gain of 50.2%.
Let’s Delve Deep
Macy’s posted adjusted earnings of 70 cents a share, excluding impairment and other costs, compared with 46 cents reported in the year-ago period. Excluding gain from sales of assets, earnings came in at 59 cents, up 59.5% from 37 cents delivered in the prior-year quarter. We note that the bottom line comfortably surpassed the Zacks Consensus Estimate of 49 cents. Earnings gained from solid performance across stores as well as persistent digital growth.
This Cincinnati, OH-based company generated net sales of $5,572 million that lagged the Zacks Consensus Estimate of $5,619 million and dipped 1.1% year over year.
Comparable sales (comps) on an owned plus licensed basis jumped 0.5%, while on an owned basis, comps were flat with the prior-year quarter. The shift in the spring Friends & Family promotion due to the 53-week calendar in fiscal 2017, mainly impacted comps in the fiscal second quarter. Adjusting for this shift, comps on an owned plus licensed basis increased 2.9% in the fiscal second quarter. This marked the third straight quarter of comps growth for the company. Strategic investments across stores, technology and merchandising are aiding comparable sales growth.
Adjusted operating income surged 13.5% to $320 million, while adjusted operating margin increased 70 basis points to 5.7%.
Other Financial Aspects
Macy’s ended the quarter with cash and cash equivalents of $1,068 million, long-term debt of $5,473 million, and shareholders’ equity of $5,916 million, excluding non-controlling interest of $22 million.
FY18 View
Backed by the confidence in its strategic initiatives, solid execution and a robust consumer spending environment, Macy’s raised earnings and sales projections for fiscal 2018. The company now anticipates total sales to be flat to up 0.7% compared with the prior guidance of 1% decline to 0.5% increase. Comps on an owned plus licensed basis are projected to increase 2-5% in the second half of fiscal 2018. This brings the fiscal 2018 comps growth guidance to 2.1-2.5% increase compared with the previous guidance of 1-2% 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 $3.95-$4.15 per share for fiscal 2018, up from the prior view of $3.75-$3.95. The Zacks Consensus Estimate for the fiscal year is pegged at $3.88, which is likely to witness upward revision in the coming days.
Interested in Retail? Check these 2 Trending Picks
Abercrombie & Fitch (ANF - Free Report) delivered an average positive earnings surprise of 32.3% in the trailing four quarters. The company has a long-term earnings growth rate of 12.5% and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zumiez (ZUMZ - Free Report) delivered an average positive earnings surprise of 18.6% in the trailing four quarters. The stock has surged 42.2% in the past month and carries a Zacks Rank #1.
Kohl’s (KSS - Free Report) delivered an average positive earnings surprise of 9.4% in the trailing four quarters. It has a long-term earnings growth rate of 6.7% and carries a Zacks Rank #2.
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Macy's (M) Q2 Earnings Top, Sales Miss Pushes Stock Down
Macy’s, Inc. (M - Free Report) delivered the fifth straight quarter of positive earnings surprise, when it reported second-quarter fiscal 2018 results. However, total sales fell short of the consensus mark after a beat in the preceding quarter. With this, the company delivered negative sales surprise in three of the last four quarters.
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 growth at its brick-and-mortar stores. This along with robust e-commerce and mobile-commerce bode well for the company.
Confidence in its strategic initiatives, solid execution and a robust consumer spending environment has prompted this U.S. department store chain to lift the sales and earnings view for fiscal 2018. However, the market punished the stock probably on the soft sales performance, sending shares down 5.5% during pre-market trading hours. Nonetheless, this Zacks Rank #2 (Buy) stock has rallied 66% year to date, compared with the industry's gain of 50.2%.
Let’s Delve Deep
Macy’s posted adjusted earnings of 70 cents a share, excluding impairment and other costs, compared with 46 cents reported in the year-ago period. Excluding gain from sales of assets, earnings came in at 59 cents, up 59.5% from 37 cents delivered in the prior-year quarter. We note that the bottom line comfortably surpassed the Zacks Consensus Estimate of 49 cents. Earnings gained from solid performance across stores as well as persistent digital growth.
Macy's, Inc. Price, Consensus and EPS Surprise
Macy's, Inc. Price, Consensus and EPS Surprise | Macy's, Inc. Quote
This Cincinnati, OH-based company generated net sales of $5,572 million that lagged the Zacks Consensus Estimate of $5,619 million and dipped 1.1% year over year.
Comparable sales (comps) on an owned plus licensed basis jumped 0.5%, while on an owned basis, comps were flat with the prior-year quarter. The shift in the spring Friends & Family promotion due to the 53-week calendar in fiscal 2017, mainly impacted comps in the fiscal second quarter. Adjusting for this shift, comps on an owned plus licensed basis increased 2.9% in the fiscal second quarter. This marked the third straight quarter of comps growth for the company. Strategic investments across stores, technology and merchandising are aiding comparable sales growth.
Adjusted operating income surged 13.5% to $320 million, while adjusted operating margin increased 70 basis points to 5.7%.
Other Financial Aspects
Macy’s ended the quarter with cash and cash equivalents of $1,068 million, long-term debt of $5,473 million, and shareholders’ equity of $5,916 million, excluding non-controlling interest of $22 million.
FY18 View
Backed by the confidence in its strategic initiatives, solid execution and a robust consumer spending environment, Macy’s raised earnings and sales projections for fiscal 2018. The company now anticipates total sales to be flat to up 0.7% compared with the prior guidance of 1% decline to 0.5% increase. Comps on an owned plus licensed basis are projected to increase 2-5% in the second half of fiscal 2018. This brings the fiscal 2018 comps growth guidance to 2.1-2.5% increase compared with the previous guidance of 1-2% 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 $3.95-$4.15 per share for fiscal 2018, up from the prior view of $3.75-$3.95. The Zacks Consensus Estimate for the fiscal year is pegged at $3.88, which is likely to witness upward revision in the coming days.
Interested in Retail? Check these 2 Trending Picks
Abercrombie & Fitch (ANF - Free Report) delivered an average positive earnings surprise of 32.3% in the trailing four quarters. The company has a long-term earnings growth rate of 12.5% and carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zumiez (ZUMZ - Free Report) delivered an average positive earnings surprise of 18.6% in the trailing four quarters. The stock has surged 42.2% in the past month and carries a Zacks Rank #1.
Kohl’s (KSS - Free Report) delivered an average positive earnings surprise of 9.4% in the trailing four quarters. It has a long-term earnings growth rate of 6.7% and carries a Zacks Rank #2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>