Macy’s cheered by 3Q trends, narrows loss
Home textiles a contributing factor
-- Home Textiles Today, 11/11/2009 10:40:00 AM
Cincinnati – Macy's Inc.’s third quarter exceed its expectations for same-store sales, gross margin, earnings and cash flow, boosting the department store chain’s confidence going into the holiday season.
Comp store sales declined 3.6%, but that was an improvement by nearly 6 points from Macy’s spring trend. On a two-year basis, third quarter comp store sales were down 4.8%, which represents a 1 point improvement related to the first six months of the year.
“That is very encouraging and bodes well for the very important fourth quarter. We were also pleased that we were able to produce these sales as a higher-than-usual incremental profit rate,” said Karen Hoguet, cfo, during the 850-unit retailer’s earnings call today
The home textiles category was singled out as among the best performers during the three-month period, along with men’s and women’s sportswear, shoes and housewares.
The business improved progressively each month during the period, according to Terry Lundgren, chairman, president and ceo.
Macy's posted a net loss of $35 million, or 8 cents per share, for the third quarter ended Oct. 31, compared to a loss $44 million, or 10 cents per share in the same period last year. Excluding restructuring costs, the company lost 3 cents per share versus a loss of 8 cents per share in 2008’s third quarter.
Sales fell 3.9% to $5.28 billion.
“We continue to see strong results in the My Macy’s pilot districts relative to those stores that were not converted until this year. This continues to be very encouraging,” Hoguet said. “The pilot districts in total still outperform the legacy doors by 1.9 points. We expect to begin to see the impact of My Macy’s throughout the company in the coming months.”
Of the company’s Top 10 districts in same-store sales in the third quarter, seven were among the original My Macy's pilot districts, added Lundgren.
For the first three quarters the fiscal year, Macy's reported a loss of $116 million, or 27 cents per share, compared with a loss of $30 million, or 7 cents per share in the same period a year ago. Excluding restructuring-related costs, earnings were 1 cent per share.
For the year to date, Macy's sales totaled $15.6 billion, down 7.8%, with a 7.5% comp decline.
Online sales positively affected Macy’s same-store sales by 0.6 percentage points in the third quarter and 0.5 percentage points in the first nine months. Online sales are included in the same-store sales calculation for Macy's Inc.