Macy's Profit Rockets 38% but Shares Still Drop

It was revealed on Wednesday that Macy's M has reported first quarter profits that have leaped up 38%, thanks in no small part to its recent move to tailor fashions to local markets. That 38% did manage to beat Wall Street expectations, which are still understandably low following a dreadful retail climate. Still, the company's shares fell a disappointing 5% in Wednesday morning trading and now, investors are worried. Macy's net income shot up to $181 million, or 43 cents per share, for the quarter ending April 28, up from $131 million, or 30 cents per share, a year ago. Meanwhile, revenue rose 4.3% to $6.14 billion, up significantly from $5.89 billion the previous year. Any time we see impressive increases in net income and revenue from retail giants like Macy's, experts and analysts start asking if the economic disaster is over, if the fact that people are spending money on clothes perfumes and home goods means that all ios well again. That's fair enough, if naïve. But Macy's does need to be commended for the brave marketing strategy that saw them direct goods at specific geographic locations. The company's people did their research, found out what was popular where, and then went with the results. That approach has proven to be successful. "The momentum in our business at Macy's and Bloomingdale's continued to build in the first quarter, with sales and earnings exceeding our expectations going into the year," Terry J. Lundgren, Macy's chairman, president and CEO, said in a statement. "The quarterly data clearly demonstrates the strength of our results as we continue to implement our strategies." Lundgren has every right to be delighted, and if he has other clever strategies up his sleeve, as he implies, then it'll be fascinating to see what they are and how they play out. Consumer spending accounts for 70% of the U.S.'s economic activity and, with Macy's being the first of the major retailers to report earnings, the government will be hoping that the much-improved results mark a trend that is set to continue. Follow me @BCallwood.