Macy’s Inc. surprised investors with a first-quarter profit and raised its full-year outlook, sending its stock up in Tuesday’s early market hours.
For the three months ended May 1, the department store logged adjusted earnings of 39 cents per share, compared with the prior year period’s loss of $2.03 per share. Wall Street had predicted a loss of 41 cents per share. Revenues surged 56% to $4.71 billion, compared with analysts’ forecasts of $4.37 billion.
Shares for the company jumped 5% in premarket trading. As of 8:45 a.m. ET, its stock was up 3.3% to $19.80.
According to chairman and CEO Jeff Gennette, Macy’s outperformed sales expectations across all three of its brands: its namesake chain, Bloomingdale’s and luxury beauty retailer Bluemercury.
“We built on our momentum from the fourth quarter and our sales trend continued to improve throughout the first quarter,” he said. “These results were driven by the positive effects of the government stimulus program and expanding vaccine rollout, coupled with the accelerated execution of our Polaris strategy, including investments in our digital platforms.”
At its investor day last February, Macy’s unveiled a three-year turnaround plan that included trimming 125 stores from its total footprint, cutting 2,000 jobs — or about 9% of its corporate workforce — and ramping up investments in both higher-margin private labels and off-price through Macy’s Backstage. It shared expectations for these moves to save the company $1.5 billion annually by the end of fiscal 2022 and said it expected its top 250 stores to account for 78% of sales by 2021.
For the first quarter, the department store’s comparable store sales rose 62.5% on an owned basis and 63.9% on an owned-plus-licensed basis. (Versus 2019 figures, however, comps were down 10.5% and 10%, respectively.) E-commerce was the bright spot for Macy’s: The channel advanced 34% over the prior year period and 32% over the first quarter of 2019. Online penetration, it added, accounted for 37% of sales.
What’s more, the Macy’s brand brought in 4.6 million new customers — a 23% gain from 2019 — with 47% of shoppers coming through the digital channel.
“As consumers seek to reengage with each other, we are seeing promising signs that our core customers are shopping again, and we continue to attract new customers, who increasingly begin their shopping experience with us online,” continued Gennette. “Customers are shopping categories that have been strong throughout the pandemic — including home, fine jewelry and watches, fragrance and luxury items — and we’re encouraged by the improvement we’re seeing in special occasion categories as customers begin to travel and return to a pre-pandemic lifestyle.”
The momentum has led Macy’s to improve its guidance for the full year. The chain is now calling for net sales to range from $21.73 billion to $22.23 billion, compared with the prior projection of $19.75 billion to $20.75 billion. It estimated that adjusted earnings per share would fall between $1.71 to $2.12, versus the previous expectation of adjusted earnings of 40 cents to 90 cents per share. It had approximately $1.8 billion in cash at the end of the first quarter.
“The momentum and strength of our digital business is reshaping how we engage with customers as an omnichannel retailer,” CFO Adrian Mitchell added. “As we execute the Polaris strategy, Macy’s is well positioned for long-term, profitable growth.”