Macy’s Earnings Miss 3Q EPS, But Bumps 2016 Year Sales Guidance

Could a happy holiday season be in the offing for Macy’s?

Upon issuing third-quarter results Thursday morning, the department store operator boosted its sales outlook for the remainder of the year, tied in part to better results than the Street expected.

The bottom line, adjusted for one-time items, came in at 17 cents a share, which was several cents worse than the 41 cents touted by consensus and representing slippage from the 36 cents per share seen in the same period last year.  Sales were $5.6 billion, which matched analyst expectations. In addition, same-store sales for those operations open at least a year were down 3.3 percent. The third quarter marked the seventh straight quarter of same-store declines.

But perating trends headed into the holiday season have been sanguine enough to lead Macy’s management to state that it remains “confident” in its previous full year guidance, at $3.15 to $3.40 (while the Street remains at $3.35). The firm said that sales guidance, however, is being lifted, as the decrease here will be n the range of 2.5 percent to 3 percent; management had guided earlier in the year for a slip of 3 percent to 4 percent.

In a statement that accompanied the earnings release, Terry J. Lundgren, who serves as chairman and chief executive officer of the company, said that “the strengthening trend across the apparel businesses, coupled with new initiatives like tech watches from Apple, Michael Kors and others” are providing “good indicators” for the current quarter and, by extension, the boosted top-line guidance.

Separately, centering on its real estate portfolio, Macy’s said that it has formed a strategic alliance with Brookfield Asset Management, centered on that portfolio. With further disclosure of real estate–related activity, among its largest transactions in the quarter, Macy’s said that it sold its 248,000-square-foot Union Square Men’s building, located in San Francisco, for $250 million, with a leaseback provision across two years. The transaction will result in a $235 million gain.

A conference call is being held this morning by management to discuss Macy’s earnings. Shares are up 7 percent at the opening of trading to $41.