Macy's (M) Tops Q3 EPS by 10c; Trims FY14 EPS Outlook

Macy's (NYSE: M) reported Q3 EPS of $0.61, $0.10 better than the analyst estimate of $0.51. Revenue for the quarter came in at $6.2 billion versus the consensus estimate of $6.35 billion.

Comparable sales together with comparable sales of departments licensed to third parties were down 0.7 percent in the third quarter of 2014 over 2013.

We are very pleased with our third quarter earnings, even though the sales performance fell short of our expectations. On a two-year basis, our third quarter sales trend was essentially unchanged from the first half of 2014. We knew we were up against very strong third quarter sales growth for our company last year, and thus we had anticipated that our year-over-year comparison would be lower in the third quarter than in the fourth quarter. Even so, sales did not live up to our expectations in the quarter. However, we were able to maintain gross margin flat to last year and reduced SG&A expense, even excluding the timing benefit of some items, including the sale of certain assets. All in all, it was a solid quarter for earnings,” said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc.

“Going forward, we remain optimistic for the fourth quarter based on several factors. First, we have developed an outstanding merchandise assortment for holiday gift-giving and self-purchase rooted in great style, exclusive offerings and outstanding value during this key shopping period. Second, we have enhanced our transition to fresh post-holiday vacation and resort assortments. Third, we have new store, omnichannel and marketing strategies in place that we believe will drive incremental business throughout the fourth quarter. This includes Buy Online Pickup in Store now rolled out to all full-line Macy’s and Bloomingdale’s locations, Same Day Delivery pilots up and running in eight major Macy’s markets and four Bloomingdale’s markets, and improved functionality and usability in upgraded mobile apps. And fourth, we are poised to capitalize on a return to more normalized weather patterns after the unusually severe snowstorms in the fourth quarter last year,” Lundgren said. “This adds up to a strong opportunity to continue to grow our business this holiday, a time of year when customers naturally gravitate to Macy’s and Bloomingdale’s as primary shopping destinations.”

Macy's sees FY2014 EPS of $4.25-$4.35, versus prior guidance of $4.4-$4.5 and the consensus of $4.40.

uidance is for full-year 2014 comparable sales together with comparable sales of departments licensed to third parties to increase by 1.2 percent to 1.5 percent (0.7 percent to 1 percent on a comparable sales basis exclusive of licensed businesses), compared to previous guidance for growth of 2 percent to 2.5 percent (1.5 percent to 2 percent on a comparable sales basis exclusive of licensed businesses). In the fourth quarter, comparable sales together with comparable sales of departments licensed to third parties are expected to grow by approximately 2 percent to 3 percent (1.8 percent to 2.8 percent on a comparable sales basis exclusive of licensed businesses).

For earnings history and earnings-related data on Macy's (M) click here.

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