A view of the Macy’s flagship store
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Macy’s stock soared Thursday after the department store operator crushed expectations for July quarter earnings, raised its full-year outlook, and reinstated its dividend.
Macy’s (ticker: M) reported an adjusted profit of $1.29 a share during the fiscal second quarter, far ahead of expectations for 23 cents a share, according to FactSet. Sales of $5.65 billion, up 59% year-over-year, also beat estimates for $5.01 billion. Same-store-sales jumped 61.2%, crushing forecasts for 41.2% growth.
“Macroeconomic trends are shifting towards more normal patterns, and M’s sales are mirroring that shift, with denim, luggage, and occasion-apparel showing renewed strength,” writes CFRA analyst Elizabeth Vermillion.
Macy’s stock closed up 19.6% at $21.61 on Thursday, its highest close since July 31, 2019, even as the S&P 500 rose 0.1% and the Dow Jones Industrial Average declined 0.2%. The stock had risen 60% in 2021 and 188% over the last12 months.
The company reinstated its quarterly dividend at 15 cents per share, payable on Oct. 1 to shareholders at the close on Sept. 15, and the board also authorized a $500 million share repurchase program.
“Second quarter results were strong across all three nameplates and surpassed our expectations,” CEO Jeff Gennette said in the earnings release. “Our momentum in the first quarter accelerated in the second quarter as we successfully reengaged core customers and attracted new, younger customers with new brands and categories.”
Jefferies analyst Stephanie Wissink pointed out the brand added 5 million new customers, up 30% from the second quarter of 2019. About 41% of those came through digital channels.
Macy’s now expects full-year sales between $23.55 billion and $23.95 billion, up from a prior range that topped out at $22.23 billion. Its outlook for adjusted earnings per share is now between $3.41 and $3.75, up from its prior range that topped out at $2.12.
Separately, the company said it was partnering with WHP Global to open a Toys”R”Us shop-within-a-shop concept in more than 400 Macy’s stores. A landing page for the iconic toy store brand was also launched on the Macy’s website.
Corrections & Amplifications: Elizabeth Vermillion covers Macy’s for CFRA. The original analyst note provided to Barron’s inaccurately attributed it to Camilla Yanushevsky.
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