Macy’s, Inc. reported that its third quarter earnings per share rose by 31 percent to 47 cents in the third quarter of 2013, ended Nov. 2, 2013. This compares with 36 cents per share in last year’s third quarter.
“We were able to achieve a very successful third quarter of 2013, despite the tepid economic climate. This was our 15th consecutive quarter of improved earnings per share. Comparable sales rose by 3.5 percent in the quarter and, together with sales from departments licensed to third parties, were up 4.6 percent. Our improved sales performance resulted from continued success in the execution of our key strategies My Macy’s localization, Omnichannel integration and Magic Selling customer engagement. In addition, business in the third quarter benefitted from intensified marketing strategies to emphasize the outstanding value in our merchandise deliveries,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s, Inc. “Both Macy’s and Bloomingdale’s performed well in the quarter, and we saw improvement in the sales trend in every region of the country compared with the spring season.
“Our business improved during the quarter, with particular strength in October, so we are entering the fourth quarter with confidence. We have curated an outstanding offering of the best gifts, fashion, value and service for our customers throughout the holiday season. Additionally, we have completed the second year of our multi-year remodel project at Macy’s Herald Square flagship store in New York City, with the entire first and second floors now fully re-created into the world’s most exciting presentation for important categories such as cosmetics, fragrances, women’s shoes, fine jewelry, watches and men’s apparel,” Lundgren said. “Our success in the fourth quarter will be driven by a wide selection of exclusive products from the most-wanted brands and designers. We will bring them to our customers, whether they shop in our stores, online, via mobile or all three. The values we offer will be appealing. We will be better able to satisfy customers’ needs with an energized organization supported by the hiring of 83,000 seasonal associates. Our in-store and online executions will complement each other, and our marketing will clearly communicate the Magic of Macy’s and the exceptional holiday fashion at Bloomingdale’s.”
For the first three quarters of 2013, Macy’s, Inc.’s diluted earnings per share were $1.74, an increase of 20 percent compared with earnings of $1.45 per diluted share in the first three quarters of 2012.
Sales
Sales in the third quarter of 2013 totaled $6.276 billion, up 3.3 percent from total sales of $6.075 billion in the third quarter of 2012. On a comparable sales basis, Macy’s, Inc.’s third quarter sales were up 3.5 percent in 2013 over 2012. Together with sales from departments licensed to third parties, third quarter 2013 sales on a comparable basis were up 4.6 percent.
For the year to date, Macy’s, Inc. sales totaled $18.729 billion, up 2.1 percent from total sales of $18.336 billion in the first 39 weeks of 2012. On a comparable sales basis, Macy’s, Inc.’s year-to-date sales were up 2.2 percent in 2013 over 2012. Together with sales from departments licensed to third parties, year-to-date 2013 sales on a comparable basis were up 3.1 percent.
The company’s comparable sales include net sales from stores open at least one full fiscal year, as well as online sales at macys.com and bloomingdales.com. The company licenses third parties to operate certain departments in its stores and receives commissions from these third parties based on a percentage of their net sales. Neither the licensed department sales nor the commissions received are included in the calculation of comparable sales.
Please see the last page of this news release for important information regarding the calculation of the company’s comparable sales together with comparable sales from departments licensed to third parties. The company believes that the combination of the two provides a useful measure for assessing changes in total customer demand at Macy’s and Bloomingdale’s.
In the third quarter, the company opened a new Macy’s replacement store in Bay Shore, NY, and consolidated the Macy’s men’s and furniture store in downtown Sacramento, CA, into a nearby full-line store. Early in the fourth quarter, the company opened a new Bloomingdale’s store in Glendale, CA.
Operating Income
Macy’s, Inc.’s operating income totaled $360 million or 5.7 percent of sales for the quarter ended Nov. 2, 2013, compared with operating income of $325 million or 5.4 percent of sales for the same period last year. For the first three quarters of 2013, Macy’s, Inc.’s operating income totaled $1.329 billion or 7.1 percent of sales, compared with operating income of $1.270 billion or 6.9 percent of sales for the same period last year.
Cash Flow
Net cash provided by operating activities was $819 million in the first three quarters of 2013, compared with $889 million in the first three quarters of 2012. Net cash used by investing activities in the first three quarters of 2013 was $541 million, compared with $615 million a year ago. Net cash used by financing activities in the first three quarters of 2013 was $943 million, compared with net cash used by financing activities in the first three quarters of 2012 of $1.837 billion.
The company repurchased approximately 10.1 million shares of its common stock for a total of approximately $447 million in the third quarter of 2013. In the fiscal year to date, the company repurchased approximately 27.6 million shares of its common stock for approximately $1.25 billion. At Nov. 2, 2013, the company had remaining authorization to repurchase up to approximately $1.75 billion of its common stock.
Looking Ahead
The company reiterated its guidance provided in August 2013. Comparable sales are expected to increase in the range of 2.5 percent to 4 percent in the second half of 2013, and in the range of 2 percent to 2.9 percent for the full-year-2013. Earnings for fiscal 2013 are expected in the range of $3.80 to $3.90 per diluted share.
