Department store chain Macy’s reported quarterly earnings that beat analysts’ expectations, claiming that strong digital sales boosted results, as the retailer continued to make investments to improve its stores.
The department store chain also raised its earnings outlook for the whole year, anticipating a strong holiday season.
On the other hand, its shares fluctuated after the news, climbing over 2 percent on Wednesday morning but declining nearly 8 percent. The stock has rallied 80 percent from a year ago. Some analysts say that they’re waiting if Macy’s can perform strongly in the fourth quarter, during which it faces tougher competitors.
“This is only the start of Macy’s journey,”said Neil Saunders, Managing Director at GlobalData Retail. “A lot more work is still needed to make Macy’s a unique and compelling retail destination.”
Macy’s earnings per share was 27 cents, which is higher than analysts’ expectations of 14 cents. Revenue came in at $5.40 billion, short of the $5.41 billion estimates. Its same-store sales were up 3.3 percent, versus the 2.8 percent expected growth.
“We are ready for the fourth quarter,” said chief executive officer Jeff Gennette. “I think the backdrop for consumer spending is good, their confidence is strong, the dotcom business is really humming… For stores, we are going into the fourth quarter in a healthy place with momentum.”
Macy’s reported fiscal third-quarter net income of $62 million, or 20 cents per shares, higher than $30 million, or 10 cents per share, from a year ago. Not including one-time items, Macy’s earned 27 cents, ahead of the 14 cents estimated by analysts surveyed by Refinitiv.
The company’s said that its online sales were higher by a double-digit percentage, driven by growth of sales made via mobile devices. Macy’s headed for$1-billion record worth of mobile sales by the end of the year.
Sales from their stores that have been open for at least a year were higher 3.3 percent, marking the fourth quarter in a row of same-store sales growth for Macy’s, and exceeding Wall Street expectations for growth of 2.8 percent.
As for the full-year guidance, Macy’s is betting for earnings per share to fall within $4.10 to $4.30, higher from $3.95 to $4.15. It also decreased its forecast for same-store sales to climb within a range of 2.3 percent and 2.5 percent.
Estimates for net sales narrowed to an expected increase of between 0.3 percent and 0.7 percent, compared with flat to 0.7 percent previously.
Macy’s has been testing new technologies in an attempt to avoid going belly up just like the now-bankrupt Sears, aiming also to lure more customers and shoppers to increase sales.
The department store chain is also putting up mini marketplaces to some locations to sell goods from lesser-known and local brands. It’s also adding some augmented reality devices to stores to enable shoppers to try on some make up virtually, along with virtual reality headsets to enable shoppers to see furniture in real life.