Macy’s Inc. (NYSE: M) posted its second quarter results for the fiscal year and beat estimates in both revenue and earnings.
The company posted an adjusted EPS of 48 cents compared to the estimates of 46 cents by Thomson Reuters. And posted a sales of $5.55 billion compared to an estimate of $5.52 billion by Thomson Reuters. Sales were down 5.4 percent year over year compared to last year’s second quarter results of $5.86 billion.
Year over year, Macy’s sales totaled $10.89 billion, down 6.4 percent from total sales of $11.63 billion in the first half of 2016.
Net income rose to $116 million, or 38 cents per share, from $11 million, or 3 cents per share, a year earlier. This excludes noncash retirement plan settlement charges and net premiums and fees associated with debt repurchases.
Although Macy’s had beaten estimates, this marks the 10th straight quarter of declining sales.
“Macy’s, Inc.’s results for the second quarter were in line with our expectations, and we are on track to meet 2017 sales and earnings guidance. We saw a notable contribution from the full execution of our new women’s shoe and jewelry models and the continued successful testing of Backstage in store. We are excited about plans for fall, including the launch of a new loyalty program and the new marketing strategy, which we anticipate will further improve our sales trend in the back half of the year,” said Jeff Gennette, Macy’s president and CEO.
During the second quarter, Macy’s had opened 16 new freestanding Bluemercury beauty specialty stores and 12 new Macy’s Backstage, Macy’s off brand store.
But at the same time, Macy's is in the midst of closing 100 full-line stores due to their declining profitability. The company said it plans to invest in its "highest-potential locations" and move "more aggressively in digital and mobile”, according to CNBC.
Earlier in the year, the company posted poor first quarter results that sent shares plummeting by 39 percent due to decline in sales and higher inventory that factored into margins.
"The company may now be getting its act together in improving the quality of the in-store experience," GlobalData Retail Managing Director Neil Saunders said. "We are hopeful that this energy and drive is a function of the new leadership of Jeff Gennette, although we recognize that it is still far too early in his tenure to pass fair judgment."
Even though Macy’s was able to beat estimates during the second quarter, the company still maintains its previous expectations for the full year outlook.
The company posted its full year outlook in the results that it expects to see comparable sales down decline by 2.2 percent to 3.3 percent. The company also expects sales to be down 3.2 percent to 4.3 percent for the fiscal year. The company also expects an adjusted EPS to be between $3.37 to $3.62, which includes the impact anticipated settlement charges and net premiums and fees associated with debt purchases.
“We are working with a mindset of continuous improvement and will adapt our business in order to reach our goal of stabilizing the brick-and-mortar business while investing for accelerated growth in digital and mobile. Key to this strategy is engaging our customers with an improved experience that includes more elevated and exclusive assortments, a better integration of technology both online and in the store, and additional enhancements intended to drive traffic and sales. There is still work ahead of us, however, I’m encouraged by the progress we’re making on overall performance.” said Gennette.
Gennette said he is highly focused on ending the poor sales decline streak for the past few years now. In the fall, Macy's will launch a new loyalty program, which management mentioned on Thursday as being a sales driver in the second half of the year.