Macy’s (M) Q4 Earnings Beat, Issues Upbeat View, Stock Up

Macy’s, Inc. (M – Free Report) posted the third straight quarter of positive earnings surprise, when it reported fourth-quarter fiscal 2017 results. However, total sales fell short of the consensus mark for the second quarter in a row. Nevertheless, management hinted that strategic investments across stores, technology and merchandising are likely to help the company to see comparable sales growth in fiscal 2018.

Impressive bottom-line performance and an upbeat view sent the shares up more than 8% during pre-market trading hours. In the past three months, the stock has rallied 23.8% compared with the industry’s gain of 33.1%.

Let’s Delve Deep

Macy’s posted adjusted earnings of $2.82 per share that beat the Zacks Consensus Estimate of $2.69 and surged 39.6% from $2.02 reported in the year-ago period. Higher sales and lower SG&A expenses aided the bottom line.

This Cincinnati, OH-based company generated net sales of $8,666 million that came below the Zacks Consensus Estimate of $8,724 million but increased 1.8% year over year. Comparable sales (comps) on an owned plus licensed basis jumped 1.4%, while on an owned basis comps rose 1.3%.

Macy’s Inc Price, Consensus and EPS Surprise

Macy’s Inc Price, Consensus and EPS Surprise | Macy’s Inc Quote

In an attempt to augment sales, profitability and cash flows, this Zacks Rank #2 (Buy) company has been taking steps such as cost cutting, integration of operations as well as developing its e-commerce business. The company registered double-digit growth in digital business for the 34th successive quarter.

Moreover, as part of the store rationalization program, the company plans to shut down underperforming stores. These are seen as part of the company’s endeavors to better withstand competitive pressure from both brick-and-mortar discount stores and online retailers, such as Amazon (AMZN – Free Report)

In the recent past, Macy’s also announced a few more measures to support growth plan. Under this plan, the company will shut down 11 stores in the early part of 2018 and will not only hire employees but also retrench at some stores. Further, the company will streamline some of the non-functional stores. These efforts will result in annual cost savings of $300 million beginning 2018.