Macy’s shares surge after holiday-quarter profit tops expectations

Macy’s shares surged Thursday, as the company said it drew holiday shoppers looking for gifts and held the line on promotions.

But the department store operator said it is still planning for a choppier year ahead.

Macy’s said it expects net sales to decline in a range of 1% to 3% in the fiscal year ahead compared with 2022, which would translate to between $23.7 billion to $24.2 billion. It said it expects its adjusted diluted earnings per share will range from $3.67 to $4.11.

Here’s how Macy’s did for its three-month period that ended Jan. 28 compared with what analysts were anticipating, based on Refinitiv estimates:

• Earnings per share: $1.71 vs. $1.57 expected
• Revenue: $8.26 expected vs. $8.26 billion expected

Net income for the fourth quarter fell to $508 million, or $1.83 per share, from $742 million, or $2.44 a share, a year earlier. The company reported adjusted per share earnings of $1.88. Excluding a tax benefit in the quarter, adjusted earnings per share come out to $1.71. 

Comparable sales on an owned-plus-licensed basis were down 2.7% during the period from a year ago, but up 3.3% versus the fourth quarter in 2019.

The company reported adjusted earnings per share of $1.88. Excluding a tax benefit, it delivered adjusted earnings per share of $1.71, higher than the $1.57 that analysts expected, according to Refinitiv.

Macy’s quarterly results look better than it had anticipated earlier this year. In January, the company — which also includes higher-end department store Bloomingdale’s and beauty chain Bluemercury — previewed its fourth-quarter results and said at the time that it expected its holiday sales had come in on the lighter side of expectations. The company said it noticed customers watching their spending more carefully and buying fewer items for themselves while shopping for gifts in November and December.

During a CNBC interview in January, CEO Jeff Gennette said Macy’s was closely watching the data from its own credit cards and ones co-branded with American Express. He said consumers were ringing up bigger balances and carrying more of those balances from month to month rather than paying all of them off — a potential sign of financial strain.

“When we look at our credit portfolio, you’ve got a customer that’s coming under more pressure,” he said at the time.

As of Wednesday’s close, Macy’s shares are down about 1% so far this year. Its stock trails the S&P 500, which rose by about 3% during the same period. The company’s shares closed at $20.43 on Wednesday, bringing Macy’s market cap to about $5.5 billion.

Read the full Macy’s earnings release.

This story is developing. Please check back for updates.