Macy's Sales Up, Lifts Outlook - Analyst Blog

Macy's Inc. (M) recently posted better-than-expected sales results for the four-week period ended November 27, 2010, driven by robust online and Black Friday sales. Consequently, the company has lifted its outlook.

Macy's comparable-store sales for November 2010 rose 6.1%, following an increase of 2.5% registered in October 2010 and reflecting a sharp improvement from a decline of 6.1% witnessed in November 2009.

Cincinnati, Ohio-based Macy's pointed out that year-to-date comparable-store sales grew by 4.9%.

Macy's said that total sales for November jumped 7.8% to $2,344 million from $2,174 million in the same month last year. Year-to-date, sales were up 7.1% to $19,078 million from $17,814 million in the comparable year-ago period.

Online sales, which include macys.com and bloomingdales.com, continued their growth momentum in November and soared 31.8% for the month under review, and were up 28.9% year-to-date. Macy's is seeking to expand both the Macy's and Bloomingdale's brands.

Buoyed by November results, Macy's lifted its sales and earnings guidance. The company now expects comparable-store sales for fourth-quarter 2010 between 3.5% and 4.5%, up from 3% to 4% previously anticipated. Management hinted at fourth-quarter earnings in the range of $1.44 to $1.49 per share compared with $1.42 to $1.47 forecasted earlier, which would translate into fiscal 2010 earnings between $1.96 and $2.01.

The current Zacks Consensus Estimates for the fourth quarter and fiscal 2010 are $1.50 and $2.00, respectively.

Macy's department stores sell a wide range of merchandise. Macy's products include men's, women's, and children's apparel and accessories, cosmetics, home furnishings and other consumer goods.

Macy's, which competes withJ. C. Penney Company Inc. (JCP), currently operates approximately 850 department stores in 45 states, the District of Columbia, Guam and Puerto Rico.

The company is taking steps to increase sales, profitability and cash flows, which include integration of operations, consolidation of divisions and customer-centric localization initiatives. To help drive traffic Macy's continues to focus on price optimization, inventory management and merchandise planning. However, intense competition and higher debt-to-capitalization ratio remain concerns.

Currently, we have a Neutral rating on the stock. Moreover, Macy's holds a Zacks #3 Rank, which translates into a short-term ‘Hold' rating, and correlates with our long-term recommendation.

 
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