Macys Gains 50 Percent in Profits, Stock Slides

Net income rose this quarter for Macy’s rose by $1.55 per share to $667 million, in comparison to $1.05 per share or $445 million last year at the same quarter. In addition, Macy’s reported its best same-store sales performance in 15 years. The stock’s performance outperformed analysts’ expectations on most fronts, and while analysts are bullish Macy’s for the coming year, shares dropped 1.2 percent. 

Notably, Macy’s attributes its successful quarter to tailoring their inventory to specific local tastes based on a number of factors. The company’s executives mentioned that customers seem to be responding to their company’s growing range of private label and exclusive brands coupled with the multi-channel sales efforts. The company has also implemented programs aimed at cultivating salespeople’s intrapersonal skills affecting the way they engage with customers.

Other analysts foresee Macy’s to encounter production problems in the future due to high cotton and labor costs that will almost certainly result in increased prices. In order to counter this, the company has hired a ‘pricing team,’ as reported by the Wall Street Journal, to cut costs.

According to Michelle Clark, a retail analyst at Morgan Stanley, the strategy for Macy’s has been to maintain top-line momentum combined with an emphasis on cash flow creation. Bernard Sosnick, an analyst for Gilford Securities, anticipates a bright future for Macy’s in the coming year. He stated that in addition to the profitable strategy the company has already developed, it is also revamping policies and priorities that are aimed at growth throughout 2011.

Macy’s is the first of the three major mid-price retail department stores to report its fourth quarter profit earnings. Kohl's Corp. (KSS) will report on 24 February and J.C. Penney Co. (JCP) will report on 25 February.

Sources:

http://news.medill.northwestern.edu/chicago/news.aspx?id=179272

http://online.wsj.com/article/BT-CO-20110222-712663.html

http://news.medill.northwestern.edu/chicago/news.aspx?id=179272