Press Release:
Macy’s, Inc. Reports Third Quarter Earnings of 32 Cents Per Diluted Share
Company increases full-year earnings guidance to a range of $2.70 to $2.75 per diluted share
CINCINNATI, Nov 09, 2011 (BUSINESS WIRE) —
Macy’s, Inc. (NYSE:M) today reported strong third quarter earnings that reflect ongoing sales growth and success in implementing the company’s key business strategies. Earnings were 32 cents per diluted share for the third quarter of 2011, ended Oct. 29, 2011. This compares with earnings of 2 cents per diluted share in last year’s third quarter, or 8 cents per diluted share in last year’s third quarter excluding expenses of 6 cents per share associated with the repurchase of debt.
“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.
“Our team is very excited about plans for the upcoming holiday selling season. A customer-centric approach to the business at Macy’s and Bloomingdale’s has led to an outstanding assortment of distinctive fashion product. Our stores look great. Our online sites, as well as our mobile-enhanced websites and apps, provide a robust and convenient complement to the active lifestyles of shoppers. The quality and creativity of our marketing support for holiday is the strongest ever,” Lundgren said. “You can feel the momentum and confidence that has been building at Macy’s since our organizational changes in 2009, and especially over the past nine months. We believe this will help us to continue to capture market share in the fourth quarter and lay the foundation for continued innovation in our business in 2012.”
For the first three quarters of 2011, Macy’s, Inc.’s diluted earnings per share were $1.18, compared with earnings of 42 cents per diluted share in the first three quarters of 2010. Excluding 10 cents per share of expenses associated with the repurchase of debt in the first and third quarters of 2010, earnings were 52 cents per diluted share in the first three quarters of 2010.
Sales
Sales in the third quarter totaled $5.853 billion, up 4.1 percent from total sales of $5.623 billion in the third quarter of 2010. On a same-store basis, Macy’s, Inc.’s third quarter sales were up 4.0 percent.
For the year to date, Macy’s, Inc. sales totaled $17.681 billion, up 5.7 percent from total sales of $16.734 billion in the first 39 weeks of 2010. On a same-store basis, Macy’s, Inc.’s year-to-date sales were up 5.3 percent.
Online sales (macys.com and bloomingdales.com combined) were up 39.8 percent in the third quarter and 39.4 percent year to date, compared with the same periods in 2010. Online sales positively affected the company’s same-store sales by 1.5 percentage points in the third quarter and 1.4 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 new Bloomingdale’s Outlet stores, as previously announced, in Estero, FL, and Wrentham, MA. A third new Bloomingdale’s Outlet store in Schaumburg, IL, opened in the first week of the fourth quarter. A Macy’s furniture gallery in Wayne, NJ, remains closed temporarily after flood damage in the third quarter.
Operating Income
Macy’s, Inc.’s operating income totaled $291 million or 5.0 percent of sales for the quarter ended Oct. 29, 2011, compared with operating income of $177 million or 3.1 percent of sales for the same period last year. For the first three quarters of 2011, Macy’s, Inc.’s operating income totaled $1.127 billion or 6.4 percent of sales, compared with operating income of $750 million or 4.5 percent of sales for the same period last year.
Tax Settlements
Several normal-course state tax settlements were completed in the third quarter, resulting in a lower-than-usual tax rate for the quarter. The company expected the settlements sometime in fiscal 2011, and thus they were included in guidance for an annual tax rate of approximately 37 percent.
Cash Flow
Net cash provided by operating activities was $627 million in the first three quarters of 2011, compared with $346 million in the first three quarters last year. This includes a funding contribution to the company’s pension plan of $225 million in 2011 year to date, compared with approximately $325 million in the first three quarters of 2010. Net cash used by investing activities in the first three quarters of 2011 was $472 million, compared with $285 million a year ago. Net cash used by financing activities in the first three quarters of 2011 was $522 million, including $451 million used to repay debt. This compares with net cash used by financing activities in the first three quarters of 2010 of $1.032 billion, including $1.090 billion used to repay debt.
In the third quarter, Macy’s, Inc. resumed repurchasing shares of its common stock with excess cash. During the third quarter, the company repurchased approximately 8.2 million shares for a total of approximately $221 million.
Looking Ahead
The company continues to expect same-store sales in the fourth quarter of 2011 to be up 4 percent to 4.5 percent. This translates to same-store sales for the second half of 2011 to be up 4.0 percent to 4.3 percent, and full-year same-store sales to be up between 4.8 percent and 5.0 percent. This compares with guidance provided at the beginning of the year for 2011 same-store sales to be up by approximately 3 percent.
Macy’s, Inc. is increasing its full-year 2011 earnings guidance to $2.70 to $2.75 per diluted share, including fourth quarter earnings guidance of $1.52 to $1.57 per diluted share. Previous 2011 full-year guidance (provided on August 10) was for earnings of $2.60 to $2.65 per share, and compares to initial guidance of $2.25 to $2.30 per diluted share provided at the beginning of the year.
Macy’s management is scheduled to present at the Morgan Stanley Global Consumer Conference at approximately 8:40 a.m. on Wednesday, Nov. 16 in New York City. Media and investors may access a live audio webcast of the presentation at www.macysinc.com/ir beginning at approximately 8:40 a.m. The webcast will also be available for replay.
Macy’s, Inc., with corporate offices in Cincinnati and New York, is one of the nation’s premier retailers, with fiscal 2010 sales of $25 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 seven Bloomingdale’s Outlet stores.
