Macy's Shows 20 Percent Profit on Strong Q1 Sales

Cool temperatures and consumer economic concerns did not dampen enthusiasm of shoppers at Macy’s Inc. M during Q1. At least, not too much. The company reported a 20 percent bump in profit and is increasing its dividend to 25 cents from the current 20 cents, according to The Associated Press.

The good news was tempered, somewhat, by comments from Macy’s chairman and CEO, Terry Lundgren, who pointed to weak spending by Macy’s budget-conscious consumers as well by high-income customers at Macy’s-owned Bloomingdale's Department Stores.

"We are especially pleased with our first-quarter sales and earnings performance given the challenges we overcame in this period,” Lundgren said.

During a conference call Wednesday, Macy’s CFO, Karen Hoguet said Q2 sales will lag, but less than originally forecast.

As the first major retailer to report first-quarter results, Macy’s numbers might indicate that while the economy, job, and housing markets are all improving, consumers at both ends of the spectrum are still somewhat cautious, the AP says.

Still, with earnings of $217 million, or 55 cents a share in this most recent quarter, versus $181 million, or 43 cents a share last year, the news is mostly good.

Overall revenue rose 4 percent to $6.38 billion and stores open at least a year showed revenue increases of 3.8 percent. Analysts expected an increase of 4.3 percent and overall revenue of $6.4 billion, according to financial data software firm, FactSet FDS.

Macy’s figures are of particular note when compared with those of rival J.C. Penney Company JCP. Forbes did just that and the results are telling. In three metrics, for example, same-store sales; total revenue and profit; and dividend and stock buyback, Macy’s outshined J.C. Penney. By a bunch.

As noted earlier, in Q1 Macy’s same-store sales rose 3.8 percent. J.C. Penney’s fell by 16.6 percent.

Concerning total revenue and profit, Macy’s $217 million or 55 cents a share in earnings, on $6.39 billion in sales is more than a little impressive when compared with analyst expectations, that J.C. Penney will show an overall loss of $185.4 billion.

Finally, Macy’s announcement of an increase in its quarterly dividend from 20 cents to 25 cents a share stands in stark contrast to the fact that J.C. Penney doesn’t pay a dividend anymore and is no longer buying back shares.

Macy's shares were selling for $48.45, up $1.08 or a little more than 2.25 percent at noon, Wednesday. J.C. Penney shares were trading for $19.35, up $0.74 or almost 4 percent.

At the time of this writing, Jim Probasco had no position in any mentioned securities.