Macy’s Inc. shares soared after the retailer reported fourth-quarter earnings that exceeded expectations, thanks in part to sales growth at the Bloomingdale’s and Bluemercury brands.
(Bloomberg) — Macy’s Inc. shares soared after the retailer reported fourth-quarter earnings that exceeded expectations, thanks in part to sales growth at the Bloomingdale’s and Bluemercury brands.
Adjusted earnings were $1.88 a share in the quarter ended Jan. 28, Macy’s said in a statement, compared with analysts’ average estimate of $1.58. For the current fiscal year, the company sees earnings in a range of $3.67 to $4.11 a share. The average estimate was $3.82.
Gross margin in the fourth quarter was 34.1%, down from 36.5% a year earlier. The company attributed the decline to markdowns and promotions that were larger than in 2021, a reflection of “the company’s commitment to end 2022 with inventories at the right level and composition.”
The company’s shares rose 9.5%, the most in more than three months, at 9:37 a.m. in New York trading.
“We were competitive but measured in our promotions, took strategic markdowns and intentionally did not chase unprofitable sales,” Chief Executive Officer Jeff Gennette said in the statement. The retailer is focused on areas of growth that include private brands, off-mall expansion and luxury goods, he added.
Total same-store sales, a key performance metric for retailers, fell 2.7% in the fourth quarter. That figure was supported primarily by strong growth at Bloomingdale’s and Bluemercury, the New York-based company’s higher-end brands. At Macy’s namesake brand, meanwhile, fell 3.3%.
“We believe discretionary spend will be under pressure across income tiers and spending will move toward services and essential goods,” Gennette said on a call with analysts, noting that he expects demand for gift-giving and occasion-based products to remain strong.
Over the last year, Macy’s has been recognized for managing inventory better than some other apparel companies, which over-ordered and were left with too much merchandise. Inventories were down 3% in the fourth quarter from the prior year, the company said.
(Updates share trading and adds CEO quote from analyst call.)
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