Macy’s, Inc. (NYSE: M) is seeing a gain after its earnings report this morning. The news was a bit of a surprise after poor retail sales figures started coming in from large retail operations, despite what should have been easily comparable sales. More importantly, Macy’s has raised its fiscal year profit targets.
CEO Terry Ludgren said that Macy’s “is beginning to hit its stride.” This “beginning” notion is interesting considering that even after a 20% drop, its shares are up more than 100% since the recession lows. Nordstrom Inc. (NYSE: JWN) just had the bar set higher for its earnings report, which is due Thursday.
Macy’s said that the Q2-July quarter showed a 7.2% gain in revenues to $5.54 billion. Earnings came in at $0.35 EPS. Both figures beat the Thomson Reuters estimates of $5.5 billion in revenue and $0.29 EPS.
The large growth area came from online shopping. Macy’s disclosed that its online sales rose by 28%. Online sales positively affected the company’s same-store sales by 0.5% during the second quarter.
Macy’s is now targeting a same-store sales growth figure of 4.0% to 4.2% for all of 2010, down versus the Q2 same-store sales figure of 4.9%. That might not sound major to many investors, but the previous figure that had been telegraphed was 3.0% to 3.5%.
Earnings forecasts for the full year were raised from $1.85 to $1.90 EPS. That is above the prior target of $1.75 to $1.80 EPS, and it gets more in-line with analysts’ estimates as Thomson Reuters has estimates up at $1.87 EPS.
The company said the improvement is from several sources. Strategic initiatives are working successfully and complementing each other. Also noted was the sale of private brands and the introduction of new exclusive market brands. Improved margins (41.9% vs. 41.5% a year ago) lower expense rates and disciplined inventory management all sound better than the past.
Nordstrom may target a slightly higher average spend over Macy’s, but the bar just got raised for its unofficial expectations versus the Thomson Reuters estimates for Thursday of $0.66 EPS on $2.4 billion in revenues. Macy’s shares are up 2.2% at $19.82 in early trading, while Nordstrom shares are down 0.7% at $34.15.
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