The nation’s leading department store retailer overcame weak first quarter sales to muster a 3.2% profit improvement and expressed confidence in its performance the remainder of the year.
The company’s first quarter earnings per share of 60 cents was a penny better than analysts forecast and a 9% improvement from prior year earnings of 55 cents. However, sales declined 1.7% to nearly $6.3 billion while same store sales, excluding sales from departments licensed to third parties, fell 1.6%.
"Overall, business trends were soft in January through March, with the exception of the Valentine's Day shopping period,” said Macy’s chairman and CEO Terry Lundgren. “The trend improved in April when the weather began to turn in northern climate zones. We see this as a good sign moving forward into the second quarter.”
In addition to weather, Lundgren said first quarter comparisons were negatively impacted by a calendar shift for the company’s “Friends & Family” promotional event and comparisons against a strong performance during the first quarter the prior year.
Undeterred by the top line weakness, the company affirmed earlier guidance calling for full year same store sales growth in the range of 2.5% to 3% and earnings per share of $4.40 to $4.50. The company also rewarded shareholders by increasing the quarterly dividend payout 25% to 31.25 cents and increasing the stock buyback program by $1.5 billion.
“The fundamentals of our business and our ongoing strategies remain strong,” Lundgren said. “This, combined with the momentum we have built over the past five years, leads us to feel confident about the company's prospects. Our board shares this confidence and increased our dividend and share repurchase authorization to provide an even greater return for our shareholders.”
Macy’s ended the quarter with roughly 840 stores.