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Investing.com -- Macy’s Inc. shares surged 11% premarket on Wednesday after the department store chain reported better-than-expected second-quarter results and raised its full-year guidance, driven by its strongest comparable sales growth in three years.
The retailer posted adjusted earnings per share of $0.41, exceeding analyst estimates of $0.19. Revenue came in at $4.8 billion, above the consensus forecast of $4.69 billion. Comparable sales increased 0.8% on an owned basis and 1.9% on an owned-plus-licensed-plus-marketplace basis, marking the company’s strongest performance in 12 quarters.
"Our teams achieved better than expected top- and bottom-line results during the second quarter, driven by our strongest comparable sales growth in 12 quarters, reflecting the strong performance in Macy’s Reimagine 125 locations, Bloomingdale’s and Bluemercury," said Tony Spring, chairman and CEO of Macy’s.
The company’s multi-brand strategy showed strength across its portfolio. Bloomingdale’s posted its fourth consecutive quarter of growth with comparable sales up 3.6% on an owned basis and 5.7% on an owned-plus-licensed-plus-marketplace basis. Bluemercury reported comparable sales growth of 1.2%, marking its 18th consecutive quarter of gains.
Macy’s raised its full-year guidance, now expecting revenue between $21.15 billion and $21.45 billion, up from its previous forecast of $21.0 billion to $21.4 billion. The company also increased its adjusted EPS outlook to $1.70-$2.05, compared to its earlier projection of $1.60-$2.00.
The retailer returned $100 million to shareholders during the quarter, including $50 million in dividends and $50 million in share repurchases. Merchandise inventories decreased 0.8% YoY, reflecting improved inventory management.
Despite the strong results, gross margin rate declined 80 basis points to 39.7%, reflecting proactive markdowns on remaining early Spring product and the impact of tariffs.