Macy’s at All-Time High on Q1 Earnings Beat and Another Dividend Hike

Andrew Klips |

Macy'sShares of Macy’s Inc. (M) are printing all-time highs on Wednesday after the leading retailer beat analysts on first-quarter earnings and matched sales forecasts, despite colder weather and discerning shoppers . With the strong start to the year, Macy’s also informed that it has boosted its dividend payment and increased the size of it stock buy-back plan as the company sees the momentum continuing going forward.

For the quarter, Cincinnati, Ohio-based Macy’s reported revenue of $6.39 billion, up 4 percent from the $6.14 billion it recorded in the same quarter last year. Net income for the quarter totaled $217 million, or 55 cents per share, up sharply from $181 million, or 43 cents per share in Q1 2012.

Wall Street was expected Macy’s to deliver EPS of 53 cents on revenue of $6.39 billion.

Same-store-sales for its namesake and Bloomingdale brands improved by 3.8 percent compared to the first quarter last year. One new Macy’s store was opened during the quarter. Between Macy’s and Bloomingdales, the company operates about 840 stores as of the end of the quarter.

Macy’s also shaved some costs with selling, general and administrative expenses declining to 32 percent of net sales from 32.4 percent last year.

Operating income totaled $435 million or 6.8 percent of sales for the first quarter of 2013, compared with $391 million or 6.4 percent of sales in the year prior quarter.

“We are especially pleased with our first quarter sales and earnings performance given the challenges we overcame in this period. These included sustained, unseasonably cool spring weather in our northern climate zones. In addition, we saw weakness among some of the most budget-conscious consumers, as well as among our higher household income Bloomingdale’s customers,” said Terry Lundgren, president, chairman and chief executive at Macy’s.

Macy’s board approved a nickel hike in the quarterly dividend to 25 cents per share payable on July 1 to shareholders of record on June 14. It’s the third quarterly dividend increase that started at 5 cents per share two years ago.

The board also gave a nod to increasing the company’s share repurchase program by $1.5 billion, meaning that the plan still has $2.6 billion in repurchases authorized. In the first quarter, Macy’s bought back about 8.4 million shares for an aggregate amount of approximately $360 million. Since resuming a buy-back program in August 2011, the company’s has repurchased 60.3 million shares for about $2.2 billion.

Looking forward, Macy’s reiterated its full-year outlook for profits between $3.90 and $3.95 per share. Same-store-sales are expected to grow by about 3.5 percent, the company said.

Shares of M have been steadily making new record highs in 2013 amid a nearly 25 percent appreciation in share value, including today’s 2.5 percent rise to $48.50 at the noon hour.

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Companies

Symbol Name Price Change % Volume
M Macys Inc. 36.60 -0.02 -0.05 2,651,112
PENN Penn National Gaming Inc. 13.22 -0.08 -0.60 111,219

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