Macy’s Inc., seeing strong sales across all of its divisions, reported a net profit of $286 million, or $1.08 per diluted share in the first quarter, up from $103 million, or $0.39 a share in the year-ago period.
Adjusted net income came to $315 million compared to $126 million in the year-ago period.
The earnings results exceeded Wall Street expectations, triggering a 9 percent, or $1.60, spike in Macy’s stock price to $19.21 in pre-market trading Thursday.
For the quarter ended April 30, comparable sales rose 12.8 percent on an owned basis and 12.4. percent on an owned-plus-licensed basis.
The results reflected a return to shopping for occasions and increased traffic at stores, and mirrored those of Nordstrom Inc., a key competitor, which this week also reported strong first-quarter results. However, at certain less upscale retailers such as Target and Kohl’s, the quarterly results were disappointing.
“Our company delivered solid results in the first quarter despite a challenging operating environment,” said Jeff Gennette, chairman and chief executive officer of Macy’s Inc. “We delivered strong earnings, beating our estimates, and sales that were in line with our expectations.”
By division, Macy’s comparable sales were up 10.7 percent on an owned basis and up 10.1 percent on an owned-plus-licensed basis. A shift in consumer shopping behavior to more occasion-based apparel triggered increased robust sales in dresses, women’s shoes, accessories and men’s tailored clothing.
Bloomingdale’s comparable sales on an owned basis were up 28.1 percent and on an owned-plus-licensed basis were up 26.9 percent. Results were driven by strong performances in luxury, dresses, men’s tailored, men’s and women’s contemporary apparel and luggage.
Bluemercury comparable sales were up 25.2 percent on an owned and owned-plus-licensed basis. There was a better-than-expected growth in private brands and increased demand for color in lip, face and eye categories.
Digital sales increased 2 percent year-over-year, while increasing 34 percent versus the first quarter of 2019. Digital penetration was 33 percent of net sales, a 4-percentage point decline from the first quarter of 2021, but a 9-percentage point improvement over the first quarter of 2019.
“While macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop,” Gennette added. “We saw a notable shift back to occasion-based apparel and in-store shopping, as well as continued strength in sales of luxury goods. Our omnichannel ecosystem, which spans the value spectrum, has supported our ability to flex our wide assortment of categories, products and brands to capture consumer demand despite the volatile environment. As we look ahead to the rest of 2022, we remain focused on our customers and the successful execution of our Polaris long-term growth strategy. We believe that the efficiencies we built into our business enable us to navigate through the current uncertain macro environment.”
The company reaffirmed its 2022 sales guidance and raised earnings guidance to $4.53 to $4.95 per adjusted diluted earnings per share, from previous guidance of $4.13 to $4.52. Macy’s said the raised guidance was due to first quarter 2022 share repurchases as well as improved expectations for credit card revenue.
Jeff Gennette.
Photo courtesy of Sunshine Sachs Morgan & Lylis
“We believe that our first quarter performance reflects the durability of the Polaris strategy. The actions we took in the quarter to boost our liquidity and increase our financial flexibility provides us a long runway to invest further in our transformation, navigate the unprecedented macroeconomic environment and return capital to shareholders,” said Adrian Mitchell, chief financial officer of Macy’s, Inc. “As we move into the rest of this year, we have confidence in our ability to flex and pivot quickly in this dynamic environment.”
In other results, the company said that gross margin for the quarter was 39.6 percent, up from 38.6 percent in the first quarter of 2021.
Delivery expense as a percent of net sales decreased 50 basis points, due to decreased digital penetration. Net credit card revenue was $191 million, up $32 million.
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