Macy's (M) Misses Q1 EPS by 9c; Boosts Dividend, Buyback Program

Macy's (NYSE: M) reported Q1 EPS of $0.56, $0.09 worse than the analyst estimate of $0.65. Revenue for the quarter came in at $6.23 billion versus the consensus estimate of $6.32 billion.

Comparable sales on an owned plus licensed basis were down by 0.1 percent in the first quarter. On an owned basis, first quarter comparable sales declined by 0.7 percent.

The company also announced a 15 percent increase in its dividend on common stock and a $1.5 billion increase in its share repurchase authorization.

Macy's reaffirmed FY2015 guidance. In fiscal 2015, as previously announced, the company expects to open a new Macy’s store in Ponce, PR, a Bloomingdale’s in Honolulu, HI, a new Bloomingdale’s Outlet store in Manhattan, four Macy’s Backstage off-price stores in the New York metro area, and a total of 18 Bluemercury locations (including four opened in the first quarter). For fiscal 2016, a new Macy’s store has been announced for opening in Kapolei, HI, along with a replacement Macy’s store in Los Angeles, CA. Announced new stores for fiscal 2017 include new Macy’s and Bloomingdale’s in Miami, FL, and a new Bloomingdale’s in San Jose, CA. In 2018, a new Bloomingdale’s is scheduled to open in Norwalk, CT. In addition, new Macy’s and Bloomingdale’s stores are planning to open in Abu Dhabi, United Arab Emirates, in 2018 under license agreements with Al Tayer Group.

“We had expected our first quarter sales to grow at a rate lower than our guidance for the full year. We fell short because of a confluence of factors,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer. “Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy’s and Bloomingdale’s stores, including New York City, Chicago, Las Vegas and San Francisco. The omnichannel reorganization in our merchandising, planning and marketing organizations announced in January and February also caused some temporary disruption as executives in those areas learned new roles and procedures. Fortunately, most of these short-term issues are largely behind us.

“Looking ahead, we have many reasons to be encouraged about the growth prospects for our business. We are excited by the range of new initiatives being put in place today – both organic and through our new business development organization. Within our existing business, this includes an intensification of focus in our Top 150 stores, major growth trends in active categories and accelerating success in dresses, the vanguard merchandise category in our omnichannel reorganization. The launch of our new Plenti loyalty rewards program last week was very strong, far exceeding our expectations. Our new Thalia Sodi private brand in ready-to-wear, shoes and fashion jewelry clearly is resonating with customers and selling very well,” Lundgren said.

“We also are seeing new business initiatives begin to germinate. We are looking forward to the planned launch of the Macy’s Backstage off-price business this fall, with the first four pilot locations announced last week. We have already learned a great deal about the specialty beauty channel and spa business through our acquisition of Bluemercury, and we are excited about plans to accelerate the expansion of Bluemercury through its free-standing stores, omnichannel presence and private brand placement within Macy’s beauty departments. While these new growth initiatives are early in development, we are moving fast to test, learn and bring the most successful ideas to scale quickly,” he added.

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

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