Macy's surges as second-quarter numbers top expectations

Macy’s shares surged on Thursday after the retailer’s second-quarter earnings topped analysts’ expectations, as it announced the closure of 100 stores.

Net income in the quarter ended 30 July came in at $11m or 3 cents a share, down from $217m or 64 cents the year before. Meanwhile, adjusted earnings per share came to 54 cents, beating consensus expectations of 48 cents per share.

Revenue fell to $5.87bn from $6.10bn, which was ahead of estimates of $5.77bn.

Chairman and chief executive officer Terry J. Lundgren said: “We are encouraged by the distinct improvement in our sales and earnings trend in the second quarter. Over the past few months, we have been saying that a setback is a setup for a comeback, and we now believe we are set up well to proceed to a comeback.

“A number of factors worked in our favor in the second quarter, including a normalized weather pattern, which contributed to a sales lift in our apparel business in particular. We also saw a smaller decrease in tourist spending during prime summer travel months, supported by strengthened promotional events designed to increase customer traffic and conversion. Macy’s first-ever ‘Black Friday in July’ event was a terrific success which drove record store and online sales for a mid-year period.”

Looking ahead, the company said it remains confident in its previous guidance for the full year 2016. Macy’s expects earnings per diluted share - excluding asset impairment charges and retirement settlement charges - in fiscal 2016 to be in a range of $3.15 to $3.40.

Also on Thursday, Macy’s said it intends to close around 100 full-line stores as it looks to combat declining footfall and sales. Most of the stores will close in early 2017, with the balance closing as leases and certain operating covenants expire or are amended or waived.

At 1540 BST, shares were up 13.2% to $38.47.