Macy’s (M) has jumped 9.7% to $50.82 today, after reporting far-stronger results than investors had expected.
Kevin Hagen for The Wall Street Journal Bloomberg has the details on Macy’s earnings:
Macy's Inc., the second-largest U.S. department-store company, posted fiscal third-quarter profit that beat analysts' estimates as better local selections boosted sales, signaling stronger demand headed into the holidays.
Net income in the period ended Nov. 2 rose 22 percent to $177 million, or 47 cents a share, from $145 million, or 36 cents a year earlier, Cincinnati-based Macy's said today in a statement. The average of 19 analysts' estimates compiled by Bloomberg was 39 cents. Revenue gained 3.3 percent to $6.28 billion, topping the $6.19 billion average projection.
Stifel’s Richard Jaffe and team explain what went right:
Macy's was able to achieve strong results driven by strong comp store sales of +3.5% (+4.6% comp increase when including departments licensed to third parties) and tight expense management. Sales were stronger than anticipated as business improved throughout the quarter, with particular strength in October. This bodes well for Holiday selling in our opinion. The incremental comp lift of 1.1% provided by the licensed departments is strong evidence that this strategy is helping to drive traffic and sales at Macys. Both Macy's and Bloomingdale's performed well during the quarter, and the company saw improvement in the sales trend in every region of the country compared to the spring season.
Sterne Agee’s Charles Grom, Renato Basanta and John Parke explain how Macy’s did it:
Like Alabama Head Coach Nick Saban is well known for – Macy's CEO Terry Lundgren made some intelligent halftime adjustments at the end of 2Q that paid off handsomely in 3Q. This is what good management teams do. Specifically, after a tough June/July, M called an audible and turned up its marketing efforts to amplify its value message. At the same time, M stuck with its "MOM" [Ed: Macy's jargon for My Macy's, Omnichannel and MAGIC Selling, and yes, MAGIC is an acronym within an acronym.] play calling – a blueprint for its success. Stay Long – raising PT to $57.
Macy’s success has given investors hope that this Christmas shopping season won’t be as terrible as some expect. MarketWatch explains:
They also drove up the share prices of its suppliers and department store rivals. Nordstrom (JWN) and Kohl's Corp. (KSS ), both reporting Thursday, rose more than 2% each. Its suppliers Ralph Lauren Corp. (RL) and Calvin Klein parent PVH Corp. (PVH) saw their shares up 2% and 4% each.
Ho, ho, ho.
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