Although Macy’s Inc. (NYSE: M) experienced weakness in its clientele base, the department chain posted better-than-expected fiscal first quarter earnings and revenue and hiked its quarterly dividend.
The Cincinnati OH based Macy’s, which owns namesake and Bloomingdale’s chains, is reaping rewards from its decision to invest heavily in technology. Thanks to increased efficiency arising from better in-house technology , Company’s e-commerce business has grown at brisk pace. On the other hand, sales at its rival J C Penney Co has been dwindling while Kohl’s Corp performed very modestly lately.
However, Macy’s Chief Executive, Terry Lundgreen isn’t satisfied. The CEO said that the Company experienced “weakness” not only in part of its clientele base but also among its wealthy customers.
In April, retail sales felt the pinch due to unusually cool weather. U.S. consumers had to postpone their spring shopping due to harsh weather.
For the fiscal first quarter ended May 4, Macy’s reported same-store-sales rose 3.8%. Analysts polled by Thomson Reuters were expecting it to climb by 4.3%. Overall sales increased 4% to $6.39 billion, in the first quarter, matching analysts’ consensus estimate.
Net income for the period stood at $217 million or 55 cents a share compared to a profit of $181 million or 43 cents a share, in the year-earlier quarter. Analysts’ consensus estimate was for 53 cents a share.
“The first quarter demonstrated our ability to continue to build on our success over the past few years in growing sales and earnings,” said Lundgreen in a statement.
Gross margins however remained flat at 38.8% as input costs increased 4.1%. Interest expense fell 13% in the recently concluded quarter.
The Company reiterated its full-year earnings projection of $3.90 to $3.95 a share and 3.5% increase in same-store-sales. Analysts’ consensus estimate was for earnings of $3.92 a share.
Meanwhile, the Company also announced that its board approved hiking quarterly dividend to 25 cents a share from 20 cents a share and said that it is expanding its share buyback program by $1.5 billion.
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