It was all about the comps Tuesday.
And online sales.
And even … brick and mortar sales.
Shares of Macy’s ramped up 10 percent on the heels of earnings that beat the Street, and it was likely same store sales data that stoked investor optimism.
Earnings came in at $2.82, besting the Street at $2.69. Revenues were $8.7 billion, roughly in line with estimates and up about 2 percent year over year.
Same store sales were expected to slide 30 basis points, but instead they were up – on an owned plus licensed basis – 1.4 percent.
The outlook was more sanguine than the Street had hoped. Full year earnings were guided to $3.55 to $3.75, while the Street was at $2.99. The midpoint of a sales drop for the year projected to be down 50 basis points to 2 percent was better than the Street’s projections of 3 percent lower.
Store closures are also slowing, it seems, as management stated that shuttering should come to 83 rather than the 100 that had been estimated two years ago.
Management said full year comp sales would be positive this year, having slipped 1.9 percent, as measured in 2017.
The buoyancy came as the company reported positive comps in both November and December, perhaps no surprise as those months coincided with the holiday shopping season.
Said CEO Jeffrey Gennette during the conference call with analysts:
“Consumer spending was strong and the cold weather was a benefit. As anticipated, the initiatives that we launched earlier in 2017 kicked in during the fourth quarter. And we delivered improved execution across the brand and across all three of the sub-brands: Macy’s, Bloomingdale’s and Bluemercury … Our holiday strategy was solid, from gifting to self-purchase.
Importantly, we saw an improved trend shift in beauty, driven by strong fragrance sales, gift sets and prestige skincare. We maintained a healthy inventory position, which meant we did not need additional discounting to clear inventory. And this sets us up well heading into the first quarter of 2018.”
He also said the company saw “trend improvement in our brick-and-mortar business, particularly as we moved from third to fourth quarter, which is encouraging. And we experienced continued double-digit growth in our digital business. So this is all good for us. Macy’s recipe for success is a healthy brick-and-mortar business, combined with robust growth in digital.”
Gennette said that mobile checkout and At Your Service centers will scale across most of the company’s locations.
In terms of rewards, the company is seeing enthusiastic embrace of its Star Rewards loyalty program, especially at the platinum level.
Average unit retail, measured overall, was up 3 percent. Gennette also stated that Macy’s will look to open another 100 Backstage locations in 2018, stating that “what we’re finding is its very limited cannibalization. And we’re finding that with the more new categories we put [out], the better the experience is. And we’re finding that having the same brand in different parts of the store is actually a good thing.”
In other remarks to analysts, CFO Karen M. Hoguet stated that strength was seen in “men’s tailored clothing, coats, children’s, shoes and home textiles. We were also pleased with improvement to trend in beauty, handbags and housewares. Juniors was weaker than expected.”
The number of transactions was flat year over year, she said, better than the 7 percent drop seen in the third quarter.
Promotional activity should lessen, too, said Gennette, as “having less of a promotional agenda is making sure that we’re then balancing the marketing across other things that our customer cares about, which is that Macy’s is a fashion authority.”