On Thursday, Macy’s posted sales that plunged for its most recent quarter, but tight inventory controls were able to give a boost to profit margins, which allowed the retailers to beat Wall Street expectations on earnings.
Macy’s reaffirmed its outlook for the full year, citing increased momentum as it heads to the biggest period of the year, the holiday shopping season.
Shares of the department store giant were up over 8% in afternoon trading on Thursday following the news.
In brief, Macy’s posted earnings per share of 23 cents, compared to a Wall Street forecast of 19 cents. Revenue reached $5.28 billion compared to expectations of $5.31, and sales at same-stores were down 3.6% compared to an expected drop of 2.6%.
Net income that was attributable to shareholders of Macy’s reached $36 million equal to 12 cents per share, for its fiscal third quarter. That compared to $17 million in net income equal to 5 cents per share for the same period one year ago.
Excluding one-off items, the department store retailer posted per share earnings of 23 cents. Total sales fell 6.1%. Part of this drop was attributed to fewer tourists visiting stores, as international tourist sales dropped by 11.7% during the most recent quarter.
Sales at Macy’s locations open for 13 months or more, which includes the sales in departments that are licensed to third parties dropped by 3.6%.
After posting another decline for the quarter in same store sales last August, CEO Jeff Gennette said that Macy was not ready to say when they would return to the positive.
For the full year, Macy’s did reaffirm its outlook for both sales and earnings and was upbeat about the upcoming holidays.
Total comparable sales have been projected to fall by between 2.2% and 3.3% for its fiscal 2017. Overall revenue is expected to drop by between 3.2% and 4.3%, while earnings should end the year between $3.38 and $3.63 a share.
The department chain, based in Ohio, continues its attempt to turn around, with efforts being focused on the growing off-price arm of Macy’s, known as Macy’s Backstage, and a revamp of the loyalty program of the retailer.
Many department stores in the U.S. including Macy’s, Sears, J.C. Penney, Kohl’s and Nordstrom are struggling in their attempt to maintain pace with e-retailers that have successfully draw more customers to themselves. The soon to begin holiday shopping season is a very crucial time for the traditional retailers.