Macy’s beats analysts, raises full year forecasts

Macy’s shares jumped more than 16% after the company teased the launch of a new digital marketplace that’s set to launch in the second half of 2022, and announced it had hired consulting firm Alix Partners to review its business structure. At one point, the shares hit a three-year high of $37.66.

Macy’s raised its full year forecast after topping analysts’ estimate on its earnings and now expects 2021 revenue generation  ranging between $24.12 billion and $24.28 billion, compared to a previous range of $23.55 billion to $23.95 billion.

It expects full-year adjusted earnings per share to be in between $4.57 and $4.76, up from a prior forecast of $3.41 to $3.75.

Macy’s outperformed analysts expectations

The e-commerce platform released its FY22 third quarter financial results on Thursday, EPS beats by $0.90 and revenue by $210 million. 

Macy’s earned $239 million in net profits, or 76 cents per share, compared to a loss of $91 million, or 29 cents per share, a year ago. Excluding one-time factors, the company earned $1.23 per share, above analysts’ expectations of 31 cents.

Sales increased to $5.4 billion from $3.99 billion the previous year. This was higher than the $5.2 billion forecast.

Macy’s reported 35.6 percent comparable sales growth in the quarter on an owned plus licenced basis. According to Refinitiv estimates, analysts expected growth of 29.3 percent.

Home, fragrances, jewellery, watches, and sleepwear were among the top-selling categories. Dresses, men’s suits, and luggage are examples of occasion-based categories that have continued to recover.

To close stores left out 125 batch

Macy’s announced on Thursday that it is rethinking when it will close the roughly 60 open stores left out of a batch of 125 that were set to close by 2023.

It did, however, say that it aims to announce ten closures in January and that more information about those locations will be released soon.

“The delayed closure of certain stores allows us to maintain a physical presence in the market, which is critical to our top line growth,” Chief Financial Officer Adrian Mitchell told analysts on an earnings conference call. “Digital performance is stronger in the markets where we have stores.”

Jana Partners has bought a stake in the department store chain’s business, prompting the news of more closures. Macy’s is under pressure from an activist investor to split off its e-commerce operations from its stores in order to get a higher valuation than it currently has.

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