Macy’s Earnings: Margins Suffer, but Net Income Climbs

S&P 500 (NYSE:SPY) component Macy’s Inc. (NYSE:M) reported net income above Wall Street’s expectations for the first quarter. Macy’s is a retailer that sells apparel and accessories, cosmetics, home furnishings and other consumer goods.

Investing Insights: What’s the Future of Microsoft’s Stock?

Macy’s Earnings Cheat Sheet for the First Quarter

Results: Net income for the retail-regional department stores rose to $181 million (43 cents per share) vs. $131 million (30 cents per share) in the same quarter a year earlier. This marks a rise of 38.2% from the year-earlier quarter.

Revenue: Rose 4.3% to $6.14 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Macy’s Inc. beat the mean analyst estimate of 40 cents per share. Analysts were expecting revenue of $6.13 billion.

Quoting Management: “The momentum in our business at Macy’s and Bloomingdale’s continued to build in the first quarter, with sales and earnings that exceeded our expectations going into the year. The quarterly data clearly demonstrates the strength of our results as we continue to implement our key strategies – My Macy’s merchandise localization; omnichannel integration of stores, online and mobile; and MAGIC Selling for enhanced customer engagement,” said Terry J. Lundgren, Macy’s, Inc. chairman, president and chief executive officer.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.3 percentage point to 38.8% from the year-earlier quarter. Over that time, margins have contracted on average 0.3 percentage point per quarter on a year-over-year basis.

The company has now seen its net income increase for three consecutive quarters. In the fourth quarter of the last fiscal year, net income rose 11.7% and in the third quarter of the last fiscal year, the figure rose 1290%.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 5 cents in the fourth quarter of the last fiscal year, by 16 cents in the third quarter of the last fiscal year, and by 8 cents in the second quarter of the last fiscal year.

Revenue has risen for the last four quarters. Revenue increased 5.5% to $8.72 billion in the fourth quarter of the last fiscal year. The figure rose 4.1% in the third quarter of the last fiscal year from the year earlier and climbed 7.3% in the second quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Analysts appear increasingly optimistic about the company’s results for the next quarter. The average estimate for the second quarter has moved up from 62 cents a share to 66 cents over the last ninety days. For the fiscal year, the average estimate has moved up from $3.24 a share to $3.37 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

10 Companies Dominating Revenues You Must Know>>

AW YEAH! The New Wall St. Cheat Sheet Newsletter is Here>>

Is Facebook Zucking the Air Out of These Internet Stocks?>>

More from The Cheat Sheet