Macy's Inc. (M - Get Report) posted much stronger-than-expected third-quarter earnings Wednesday, and boosted its full-year profit guidance, as same-store sales growth numbers continued to point to a robust holiday shopping season for the iconic U.S. retailer.
Macy's said adjusted earnings for the three months ended on Nov. 3, came in at 27 cents a share, up 17% from the same period last year and well ahead of the Street consensus of 14 cents per share. Group revenues, the company said, slipped to 5.404 billion but matched the market's forecast. Comparable store sales rose 3.3% on an owned-plus licensed basis, Macy's said, adding it now sees full-year sales to rising between 0.3% and 0.7% and tacked 15 cents to its prior earnings estimate of $3.95 to $4.15 a share.
"Our strategic initiatives are gaining momentum and delivering results. Another double-digit quarter from our digital business and a strong stores performance combined to help us exceed expectation," said CEO Jeff Gennette. "We continue to see an improved trend in brick and mortar across the fleet with particularly strong results from our Growth50 stores."
"The holiday season is when Macy's truly shines. We have the right merchandise, the right marketing and the right customer experiences in place to deliver a strong fourth quarter," he added.
The group's gross margin, Macy's said, was flat from the same period last year at 40.3%, suggesting its drive to grow online sales is biting into its bottom line. It's also guiding for comparable store sales growth of between 2.3% and 2.5%, compared to a year-to-date tally of 2.7%, a figure that could be contributing to the stock's pre-market performance.
Macy's shares, which have risen nearly 37% this year, fell 4% after rising earlier in the session.
Macy's had said earlier this year that it would hire an additional 80,000 temporary workers over the holiday shopping season, which unofficially kicks-off with next week's Black Friday event, amid the best prospects for U.S consumer spending in at least 10 years.
The Conference Board's benchmark consumer confidence index hit an 18-year high of 137.9 last month as the nation's jobless rate fell to the lowest level since 1949, wages grew at the fastest pace in nearly a decade and inflation remains largely in-check at just over 2%.