April sales surge bolsters Macy's optimism
After a slow, cold winter, Macy's Inc. saw its business improve in April as the spring thaw heated up shoppers' demand for shorts and T-shirts, the department store chain said Wednesday.
But Mother Nature came too late to boost the department store chain's first-quarter sales, which missed expectations despite a 3.2 percent increase in profit.
Macy's stuck by its full-year earnings outlook, indicating it thinks the April sales surge will continue.
Investors pushed shares slightly higher in premarket trading as Macy's raised its dividend by 25 percent and increased its stock-buyback program as a reflection of its confidence in the business.
"Overall, business trends were soft in January through March, with the exception of the Valentine's Day shopping period," Macy's Chairman and CEO Terry J. Lundgren said in a statement. "The trend improved in April when the weather began to turn in northern climate zones. We see this as a good sign moving forward into the second quarter."
Macy's, a standout among its peers throughout the economic recovery, is the first of the major retailers to report first-quarter results, which should provide insight into shoppers' mindset heading into the summer season. Wal-Mart Stores Inc. and J.C. Penney Co. are scheduled to report their results Thursday.
Like many retailers, Macy's, which operates corporate offices in Cincinnati and New York, was hurt by snowstorms and rain that kept shoppers away from malls in the winter months. It's still unknown whether stores can make up for lost business.
Macy's and others that cater to middle-class shoppers are facing economic hurdles. While the job market is improving and the housing market is rebounding, the gains are not strong enough to sustain big shopping sprees.
Meanwhile, retailers are trying to respond to a shift toward buying and researching on computers and mobile devices. Macy's, which also operates the upscale Bloomingdale's chain, is trying to create a more seamless experience for shoppers who are going back and forth from stores to websites.
In late March, it named Chief Merchandising Officer Jeffrey Gennette president of the company, giving him additional oversight over marketing and the online business.
Cost-cutting efforts that will trim 1,800 jobs, saving the company $100 million per year, helped boost first-quarter profit.
Macy's said it earned $224 million, or 60 cents per share, in the quarter that ended May 3. That compares with $217 million, or 55 cents per share, a year earlier.
Revenue slipped 1.7 percent to $6.28 billion.
Analysts expected a profit of 59 cents on revenue of $6.46 billion.
Revenue at stores open at least a year fell 0.8 percent, matching Wall Street estimates.
Macy's raised its dividend to 31.25 cents from 25 cents. It also announced its board reauthorized a $1.5 billion increase in its share buyback program.
The company also reiterated its outlook for earnings of $4.40 per share to $4.50 per share. Analysts expected $4.46 per share, according to FactSet.
Macy's shares rose 96 cents, or nearly 2 percent, to $58.80 in premarket trading.