Macy's Readies for Holiday after Strong 3Q
Cecile Corral -- Home Textiles Today, 12/13/2010 3:38:58 AM
CINCINNATI - Macy's Inc. exceeded its own expectations in the third quarter on three fronts - sales, earnings and cash flow - giving the department store chain the reason to approach the holiday season with optimism.
During Macy's third quarter earnings call last week, Karen Hoguet, cfo, outlined some of the key strategies the company has implemented to accelerate performance in fourth quarter. The "M.A.G.I.C." selling program, which launched this past summer with Macy's training of about 130,000 sales associates and sales managers on selling skills, is being extended through yearend "to give our seasonal hires a shortened form of this training," she said. The acronym stands for: Meet and Make connections; Ask questions and listen; Give options and advice; Inspire to buy; and Celebrate the purchase.
The recently created "Gift" strategy, which started development in May 2009, is being expanded with three new components: new gift shops in 400 doors featuring limited-edition, exclusive "and fun" gifts that are mostly under $50; "Be"-themed shops, which encompass gifts that fall under the headings "Be warm," "Be glamorous" and similar themes for all categories of business; and Celebrity shops, situated throughout the store and stocked with items from Macy's many celebrity- and exclusive branded lines, including Martha Stewart.
"All of these will be presented in new and very interesting ways both in our stores and online and the products are being supported by a terrific marketing campaign," Hoguet said.
Earnings per share for the quarter ended Oct. 30 were 2 cents versus a loss of 8 cents per share in the year-ago period.
Sales increased 6.6% to $5.62 billion, and comps were up 3.9%.
Combined online sales from macys.com and bloomingdales. com in the quarter grew a healthy 24.0%, positively impacting the company's same-store sales by 0.8%.
In the third quarter, the company opened two new Macy's stores in Palmdale and Tracy, Calif., a new Bloomingdale's store in Santa Monica, Calif., and three new Bloomingdale's Outlet stores. A fourth Bloomies outlet is set to open later this month.
Small-scale Macy's and Bloomingdale's stores were singled out as increasingly stronger performers in the quarter.
"One of thoughts behind My Macy's was to help smaller stores do better, and that appears to be working," Hoguet said.
Year to date, earnings per share were 42 cents year to date compared with a loss of 27 cents per diluted share last year.
Sales rose 7.0% to $16.7 billion, and comps increased 4.7%. Online sales - at both macys. com and Bloomingdales.com - shot up by 28.5%, supported by a 0.7% percent rise in same-store sales. Online sales are included in the same-store sales calculation for Macy's, Inc.
Cash flow results year to date proved another highlight, with $346 million in the first three quarters compared with $406 million in the same period in 2009. This includes a funding contribution to the company's pension plan of $325 million in 2010 year to date, compared with approximately $146 million in the first three quarters of 2009.
Macy's also increased its earnings guidance for the second half of 2010 to $1.50 to $1.55 per share, excluding expenses associated with the early retirement of debt in the third quarter. This compares with previous guidance of $1.45 to $1.50 per share for the second half of 2010. For the full-year 2010, earnings guidance is $1.94 to $1.99 per share, compared with previous guidance of $1.89 to $1.94, excluding expenses associated with the early retirement of debt.
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