Macy’s Inc. Earnings Cheat Sheet: Beats Wall Street Expectations

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

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Macy’s Earnings Cheat Sheet for the Third Quarter

Results: Net income for the department store rose to $139 million (32 cents per share) vs. $10 million (2 cents per share) in the same quarter a year earlier. This marks a substantial increase from the year earlier quarter.

Revenue: Rose 4.1% to $5.85 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: M beat the mean analyst estimate of 16 cents per share. Analysts were expecting revenue of $5.88 billion.

Quoting Management: “A number of factors contributed to this excellent third quarter performance. We continue to move forward in the execution of those strategies that have created a culture of growth at Macy’s — including My Macy’s localization of our assortments and shopping experience; omnichannel integration across stores, online and mobile; and MAGIC Selling and associate coaching programs to strengthen customer engagement. Bloomingdale’s also enjoyed a strong quarter, both in stores and online, as customers have continued to respond to bridge and designer merchandise. In addition, third quarter results benefitted from a strong credit performance due to improved portfolio quality,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s, Inc.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.5 percentage point to 39.4% 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 topped analyst estimates for the last four quarters. It beat the mark by 8 cents in the second quarter, by 12 cents in the first quarter, and by 8 cents in the fourth quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 7.3% to $5.94 billion in the second quarter. The figure rose 5.7% in the first quarter from the year earlier and climbed 5.4% in the fourth quarter of the last fiscal year from the year-ago quarter.

Looking Forward: Expectations for the company’s next quarter performance are higher than they were ninety days ago. Over the past three months, the average estimate for the fourth quarter has risen to $1.65 per share from $1.63. Over the past three months, the average estimate for the fiscal year has climbed from $2.55 per to share to $2.66.

Competitors to Watch: Saks Incorporated (NYSE:SKS), J.C. Penney Company, Inc. (NYSE:JCP), Kohl’s Corporation (NYSE:KSS), Nordstrom, Inc. (NYSE:JWN), Dillard’s, Inc. (NYSE:DDS), Sears Holdings Corporation (NASDAQ:SHLD), The Bon-Ton Stores, Inc. (NASDAQ:BONT), Target Corporation (NYSE:TGT), Wal-Mart Stores, Inc. (NYSE:WMT), and The TJX Companies, Inc. (NYSE:TJX).

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