Feb 22, 2011
Macy's expects more sales, profit gains this year
Feb 22, 2011
NEW YORK (Reuters) - Macy's Inc (M.N) posted a higher-than-expected profit after sales rose during the holiday quarter, and the department store chain forecast continued gains this year.
For its new fiscal year, Macy's expects sales at stores open at least a year to rise 3 percent. It forecast earnings of between $2.25 and $2.30 a share, which would be an increase from the just-ended year.
Chief Executive Officer Terry Lundgren credited the company's efforts to decentralize of sourcing, which allows regional managers to choose merchandise according to local tastes. He said those efforts still were at an early stage and would continue to lift results.
Despite the positive numbers, Wall Street's reaction was muted, and Macy's shares rose 0.3 percent to $23.82.
"The question is, is there any juice left (in those initiatives)," said Morningstar analyst Paul Swinand. There might be concerns that the company's "localization" efforts might increase costs as it needs to hire more people, he added.
Among major retailers, Macy's has reported some of the largest sales gains in the past year as shoppers more confident about their finances and jobs have traded back up to mid-tier department stores.
The company's Bloomingdale's chain, which accounts for about 10 percent of revenue, has also benefited from the recovery in luxury spending in the United States.
Macy's operates about 800 namesake department stores and 45 Bloomingdale's stores, as well as four Bloomingdale's outlets.
The company reported net income of $667 million, or $1.55 a share, for the fourth quarter ended on January 29, up nearly 50 percent from $445 million, or $1.05 a share, a year earlier.
Excluding one-time items, earnings were $1.57 per share, compared with analysts' expectations of $1.52, according to Thomson Reuters I/B/E/S.
Same-store sales rose 4.3 percent, as Macy's previously reported. Overall sales rose 5.4 percent to $8.27 billion.
Macy's gross margin slipped only 0.4 percentage points to 41.3 percent as tighter inventory, which reduces the need for profit-draining discounting, helped mitigate higher cotton costs.
(Reporting by Phil Wahba, editing by Dave Zimmerman and Lisa Von Ahn)
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