NEW YORK, N.Y. – Macy’s is seeing signs that a merry holiday shopping season could be in store.
The department store chain on Wednesday reported a quarterly profit that handily beat Wall Street expectations, with the company citing rejiggered advertising and promotions for helping reverse a slip in sales in the previous quarter.
In a conference call with analysts, chief financial officer Karen Hoguet noted that traditional gift categories such as fine jewelry, cashmere and housewares were trending well. She also noted positive trends for cold weather items such as coats, boots and sweaters.
“If we have anything close to a normal weather pattern this year, this could add significant volume,” she said.
The holiday shopping season is a make-or-break time for retailers because it can account for as much as 40 per cent of annual revenue. This year, there are also six fewer days between Thanksgiving and Christmas, intensifying the pressure for companies to perform. Already, Macy’s has said it plans to open on Thanksgiving evening for the first time.
“We expect a heightened sense of urgency among customers, so it’s important that we be ready for her every day, every time, in every way she shops,” Hoguet said.
Retailers are also facing ongoing concerns about shoppers’ willingness to spend in the weak economy. Macy’s, for example, has been stepped up promotions, which led to a slide in gross profit margins in the quarter. Increased shipping costs for online orders also contributed to the decline.
Macy’s Inc., based in Cincinnati, Ohio, is the first of the major retailers to report third-quarter results and is often seen as a barometer of spending among middle- to upper-income shoppers.
The company has been a standout among its peers throughout the economic recovery and has reaped the benefits of its strategy of tailoring merchandise to local markets. But like other clothing merchants, Macy’s saw sales slow over the summer amid new worries about the economy.
When asked about the habits of budget-conscious shoppers in the period, Hugoet said she’d have to “wait and see” how competitors fared. J.C. Penney, which is trying to recover from a botched strategy under its former CEO Ron Johnson, reports its results next week.
For the quarter ended Nov. 2, Macy’s earned $177 million, or 47 cents per share. That compares with $145 million, or 36 cents per share, a year ago.
Revenue rose 3 per cent to $6.28 billion.
Analysts expected earnings per share of 39 cents on revenue of $6.19 billion.
Revenue at stores opened at least a year, a key metric because it strips out the volatility of newly opened and closed locations, was up 3.5 per cent. Analysts expected a 2.1 per cent increase.
The company reaffirmed its guidance for sales to rise between 2 per cent and 2.9 per cent for the full year at locations open at least a year. Earnings are expected to be between $3.80 and $3.90 per share, above Wall Street’s expectations of $3.78 per share.
Shares of Macy’s were up $4.01, or nearly 9 per cent, at $50.34. The stock is up more than 18 per cent over the past year.
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