MACY'S REPORTS A 30% INCREASE
DURING THIRD QUARTER EARNINGS
CINCINNATI - Macy's, Inc. reported that its third quarter
earnings per diluted share rose by 30% to 61 cents in the third quarter of
2014, ended Nov. 1, 2014. This compares with 47 cents per share in last
year's third quarter.
For the first three quarters of 2014, Macy's, Inc.'s diluted
earnings per share were $2.01, an increase of 15% compared with earnings of
$1.74 per diluted share in the first three quarters of 2013.
"We are very pleased with our third quarter earnings, even
though the sales performance fell short of our expectations. On a two-year
basis, our third quarter sales trend was essentially unchanged from the
first half of 2014. We knew we were up against very strong third quarter
sales growth for our company last year, and thus we had anticipated that our
year-over-year comparison would be lower in the third quarter than in the
fourth quarter. Even so, sales did not live up to our expectations in the
quarter. However, we were able to maintain gross margin flat to last year
and reduced SG&A expense, even excluding the timing benefit of some items,
including the sale of certain assets. All in all, it was a solid quarter for
earnings," said Terry J. Lundgren, chairman and chief executive officer of
Macy's, Inc.
"Going forward, we remain optimistic for the fourth quarter
based on several factors. First, we have developed an outstanding
merchandise assortment for holiday gift-giving and self-purchase rooted in
great style, exclusive offerings and outstanding value during this key
shopping period. Second, we have enhanced our transition to fresh
post-holiday vacation and resort assortments. Third, we have new store,
omnichannel and marketing strategies in place that we believe will drive
incremental business throughout the fourth quarter. This includes Buy Online
Pickup in Store now rolled out to all full-line Macy's and Bloomingdale's
locations, Same Day Delivery pilots up and running in eight major Macy's
markets and four Bloomingdale's markets, and improved functionality and
usability in upgraded mobile apps. And fourth, we are poised to capitalize
on a return to more normalized weather patterns after the unusually severe
snowstorms in the fourth quarter last year," Lundgren said. "This adds up to
a strong opportunity to continue to grow our business this holiday, a time
of year when customers naturally gravitate to Macy's and Bloomingdale's as
primary shopping destinations."
Sales
Comparable sales together with comparable sales of
departments licensed to third parties were down 0.7% in the third quarter of
2014 over 2013. Third quarter comparable sales exclusive of licensed
businesses were down 1.4% in 2014 compared with 2013. Total sales in the
third quarter of 2014 were $6.195 billion, down 1.3% from total sales of
$6.276 billion in the third quarter of 2013.
Comparable sales together with comparable sales of
departments licensed to third parties were up 0.8% in first three quarters
of 2014 over 2013. Year-to-date comparable sales exclusive of licensed
businesses were up 0.1% in 2014 compared with 2013. For the year to date,
Macy's, Inc. total sales were $18.741 billion, up slightly from total sales
of $18.729 billion in the first three quarters of 2013.
In the third quarter of 2014, the company opened three new
Macy's stores in Sarasota, FL, Las Vegas, NV, and The Bronx in New York
City, and closed Macy's stores in Bradenton, FL, and York, PA. In Torrance,
CA, three Macy's stores were consolidated into two as part of a mall
redevelopment. A new Bloomingdale's replacement store opened in the third
quarter in Palo Alto, CA.
Operating Income
Macy's, Inc.'s operating income totaled $422 million or 6.8%
of sales for the quarter ended Nov. 1, 2014, compared with operating income
of $360 million or 5.7% of sales for the same period last year. For the
first three quarters of 2014, Macy's, Inc.'s operating income totaled $1.436
billion or 7.7% of sales, compared with operating income of $1.329 billion
or 7.1% of sales for the same period last year.
Cash Flow
Net cash provided by operating activities was $777 million in
the first three quarters of 2014, compared with $819 million in the first
three quarters of 2013. Net cash used by investing activities in the first
three quarters of 2014 was $596 million, compared with $541 million a year
ago. Net cash used by financing activities in the first three quarters of
2014 was $1.406 billion, compared with net cash used by financing activities
in the first three quarters of 2013 of $943 million.
The company repurchased approximately 9.0 million shares of
its common stock for a total of approximately $534 million in the third
quarter of 2014. In the fiscal year to date, the company repurchased
approximately 25.3 million shares of its common stock for approximately
$1.48 billion. At Nov. 1, 2014, the company had remaining authorization to
repurchase up to approximately $1.45 billion of its common stock.
Looking Ahead
The company has revised its 2014 guidance. Earnings per
diluted share for the full-year 2014 now are expected in the range of $4.25
to $4.35, compared with previous guidance in the range of $4.40 to $4.50.
Guidance is for full-year 2014 comparable sales together with comparable
sales of departments licensed to third parties to increase by 1.2% to 1.5%
(0.7% to 1% on a comparable sales basis exclusive of licensed businesses),
compared to previous guidance for growth of 2% to 2.5% (1.5% to 2% on a
comparable sales basis exclusive of licensed businesses). In the fourth
quarter, comparable sales together with comparable sales of departments
licensed to third parties are expected to grow by approximately 2% to 3%
(1.8% to 2.8% on a comparable sales basis exclusive of licensed businesses).
Credit Card Program Agreement Renewal
Macy's, Inc. has entered into a multi-year renewal agreement
with Citi Retail Services for operation of the Macy's and Bloomingdale's
proprietary and co-branded American Express credit card business. The new
agreement, with substantially similar financial terms, will run through
March 2025.
Macy's, Inc. operates about 840 stores in 45 states, the
District of Columbia, Guam and Puerto Rico under the names of Macy's and
Bloomingdale's, as well as the macys.com and bloomingdales.com websites. The
company operates 13 Bloomingdale's Outlet stores. Bloomingdale's in Dubai is
operated by Al Tayer Group LLC under a license agreement.
11.12.14
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