Macy’s on Tuesday reported a surprise first-quarter profit, as stimulus checks and the ongoing Covid vaccine rollout gave consumers more money and greater confidence to head back to the mall and refresh their wardrobes.
The department store chain raised its forecast, saying it is seeing building momentum as consumers head to its shops and go online to buy new outfits for weddings, travel and other special occasions.
Macy’s shares jumped nearly 5% in premarket trading.
“We are seeing promising signs that our core customers are shopping again, and we continue to attract new customers,” Chief Executive Jeff Gennette said in a statement.
During the quarter ended May 1, Macy’s swung to a profit of $103 million, or 32 cents per share, compared with a loss of $3.6 billion, or $11.53 per share, a year earlier.
Excluding one-time charges for impairment and restructuring, the early retirement of debt and income tax impact, Macy’s earned 39 cents per share. Analysts were looking for a 41-cent loss, according to a survey from Refinitiv.
Net sales grew to $4.71 billion from $3.02 billion a year earlier. That exceeded expectations for revenue of $4.37 billion.
In the year-ago period, Macy’s sales tumbled 45% as the Covid pandemic forced its stores temporarily shut and shoppers shifted their spending toward groceries and cleaning supplies, and away from clothing and footwear.
In the latest period, comparable sales rose 62.5%, topping estimates for 44.9% growth, according to FactSet.
Sales were boosted, in part, by the addition of new shoppers. Macy’s said it added 4.6 million customers during the quarter, a 23% increase from the same period in 2019. It said 47% of those new shoppers made online purchases.
Digital sales climbed 34% year over year, and grew 32% from 2019 levels.
E-commerce sales represented 37% of net sales, a six percentage-point drop from a year earlier, when Macy’s stores were shut and its only revenue stream was digital. But that’s a 13 percentage-point improvement from the first quarter of 2019, Macy’s said.
Boosted outlook
Americans have recently showed signs they’re ready to get back to more normal shopping habits. Sales of clothing and clothing accessories surged 727% in April from a year earlier, according to data from the U.S. Commerce Department.
Gennette cited continued strength in categories including home, fine jewelry and watches, fragrance and luxury items. He said special occasion categories are improving as customers begin to travel and return to a “pre-pandemic lifestyle.” Macy’s is also investing in newer categories for the business, including toys, health and wellness, and pets, he said.
Macy’s is now calling for net sales in fiscal 2021 to fall within a range of $21.73 billion to $22.23 billion, up from a prior range of $19.75 billion to $20.75 billion.
It estimates it will earn between $1.71 to $2.12 per share, after adjustments. Previously, it expected adjusted earnings of 40 cents to 90 cents per share.
As of Monday’s market close, Macy’s shares are up more than 70% year to date. The retailer has a market cap of $6 billion.
