– Sales rise 6.6%
– Same store sales rise 3.9%
– Earnings improve
– Boosts view for second half. Same store sales now expected to rise between 3.3% to 4%.
– Earnings guidance also rises
Press Release:
CINCINNATI–(BUSINESS WIRE)– Macy’s, Inc. (NYSE:M – News) today reported continued strong financial results for the third quarter of 2010, with sales, earnings and cash flow that exceeded the company’s expectations. Earnings were 2 cents per diluted share for the third quarter of 2010, ended Oct. 30, 2010. This compares with a loss of 8 cents per share in last year’s third quarter.
Third quarter 2010 results included 6 cents per diluted share of expenses associated with the repurchase of debt in the third quarter. Third quarter 2009 results included 5 cents per diluted share of restructuring costs related to division consolidations and localization initiatives. Excluding these items from both periods, earnings were 8 cents per diluted share in the third quarter of 2010, compared with a loss of 3 cents per diluted share in the third quarter last year.
“Throughout 2010, we have gained confidence and momentum as customers have responded favorably to our execution of key strategies developed and activated over the past few years. This bodes well for our business as we enter the holiday selling season with a differentiated and tailored merchandise offering, compelling marketing, and an energized organization of store associates focused on engaging customers,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s, Inc. “We are proud of the results we have generated as My Macy’s has firmly taken root, creating a leading nationwide brand with a local focus in each market. Simultaneously, Bloomingdale’s has aggressively capitalized on the return of the upscale customer and has reinforced its reputation for extraordinary contemporary fashion and service. Both brands remain in the early stages of benefitting from an enhanced omnichannel approach that integrates the offerings of Macy’s and Bloomingdale’s stores, online sites, mobile technology and social media.
“We are productively using the significant amount of cash being generated by our business to further strengthen our balance sheet. In 2010, we have retired a total of more than $1.2 billion of debt using excess cash. This includes $1 billion in repurchase transactions on the open market in the first and third quarters, as previously announced,” Lundgren said.
For the first three quarters of 2010, Macy’s, Inc.’s diluted earnings per share were 42 cents, compared with a loss of 27 cents per diluted share in the first three quarters of 2009. Excluding 10 cents per share of expenses associated with the repurchase of debt in the first and third quarters, earnings were 52 cents per diluted share in the first three quarters of 2010. Excluding 28 cents per diluted share of restructuring costs related to division consolidations and localization initiatives, earnings were 1 cent per diluted share in the first three quarters of 2009.
Sales
Sales in the third quarter totaled $5.623 billion, up 6.6 percent from total sales of $5.277 billion in the third quarter of 2010. On a same-store basis, Macy’s, Inc.’s third quarter sales were up 3.9 percent.
For the year to date, Macy’s, Inc. sales totaled $16.734 billion, up 7.0 percent from total sales of $15.640 billion in the first 39 weeks of 2009. On a same-store basis, Macy’s, Inc.’s year-to-date sales were up 4.7 percent.
Online sales (macys.com and bloomingdales.com combined) were up 24.0 percent in the third quarter and 28.5 percent year to date, compared with the same periods in 2009. Online sales positively affected the company’s same-store sales by 0.8 percentage points in the third quarter and 0.7 percentage points in the year to date. Online sales are included in the same-store sales calculation for Macy’s, Inc.
In the third quarter, the company opened two new Macy’s stores in Palmdale and Tracy, CA; a new Bloomingdale’s store in Santa Monica, CA; and three new Bloomingdale’s Outlet stores, as previously announced.
Operating Income
Macy’s, Inc.’s operating income totaled $177 million or 3.1 percent of sales for the quarter ended Oct. 30, 2010, compared with operating income of $55 million or 1.0 percent of sales for the same period last year. Third quarter 2009 operating income included $33 million in restructuring-related costs. Excluding these costs, operating income for the third quarter of 2009 was $88 million or 1.7 percent of sales.
For the first three quarters of 2010, Macy’s, Inc.’s operating income totaled $750 million or 4.5 percent of sales, compared with operating income of $189 million or 1.2 percent of sales for the same period last year. Macy’s, Inc.’s operating income for the first three quarters of 2009 included $205 million in restructuring-related costs. Excluding these costs, operating income in the first three quarters of 2009 was $394 million or 2.5 percent of sales.
Cash Flow
Net cash provided by operating activities was $346 million in the first three quarters of 2010, compared with $406 million in the first three quarters last year. This includes a funding contribution to the company’s pension plan of $325 million in 2010 year to date, compared with approximately $146 million in the first three quarters of 2009. Net cash used by investing activities in the first three quarters of 2010 was $285 million, compared with $284 million a year ago. Net cash used by financing activities in the first three quarters of 2010 was $1.032 billion, including $1.090 billion used to repay debt. This compares with net cash used by financing activities in the first three quarters of 2009 of $926 million, including $964 million used to repay debt.
Looking Ahead
Last week (on Nov. 4, 2010) Macy’s, Inc. provided increased guidance for the second half of 2010. The company’s guidance is for same-store sales in the fourth quarter of 2010 to be up 3 percent to 4 percent. This translates to same-store sales for the second half of 2010 to be up 3.3 percent to 4 percent, compared with previous guidance (provided in August 2010) of up 3 percent to 3.5 percent.
Based on stronger sales expectations, Macy’s, Inc. increased its earnings guidance for the second half of 2010 to $1.50 to $1.55 per diluted share, excluding expenses associated with the early retirement of debt in the third quarter. This compares with previous guidance (provided in August 2010) of $1.45 to $1.50 per diluted share for the second half of 2010. For the full-year 2010, earnings guidance is $1.94 to $1.99 per diluted share, compared with previous guidance of $1.89 to $1.94, excluding expenses associated with the early retirement of debt.
Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2009 sales of $23.5 billion. The company operates about 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s and Bloomingdale’s, as well as the macys.com and bloomingdales.com websites. The company also operates three Bloomingdale’s outlet stores.
