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Macy's Stock Surges After Smashing Earnings Forecast, Reinstating Dividend

Macy's will reinstate a 15 cents per share dividend, payable on October 1, while authorizing a $500 share buyback plan.

Macy's  (M) - Get Macy's Inc Report posted much stronger-than-expected second quarter earnings Thursday, and raised its full-year profit outlook while reinstating its dividend as post-pandemic shoppers shifted spending from online retailers to brick-and-mortar stalwarts. 

Macy's said adjusted earnings for the three months ending in July, the group's fiscal fourth quarter, came in at $1.29 per share, up from a loss of 81 cents per share over the same period last year and blasting the Street consensus forecast of 18 cents per share. Group net sales, Macy's said rose 58.6% to $5.647 billion, again topping analysts' estimates of a $5.01 billion tally. 

Macy's also said it would reinstate its dividend at 15 cents per share, payable on October 1, while authorizing a $500 million share buyback.

Looking into the 2022 financial year, Macy's said it sees net sales in the region of $23.55 billion to $23.95 billion, up from $21.73 billion to $22.23 billion, as back-to-school shopping looks set to accelerate, with adjusted earnings in the range of $3.71 to $3.75 per share.

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 “Second quarter results were strong across all three nameplates and surpassed our expectations. Our momentum in the first quarter accelerated in the second quarter as we successfully reengaged core customers and attracted new, younger customers with new brands and categories,” said CEO Jeff Gennette. “Through the Macy’s portfolio and our omnichannel approach, we provide a compelling, seamless integration between physical stores and digital shopping to most effectively meet the needs of our customers."

"The Polaris strategy is working. We have meaningfully improved the fundamentals and overall health of our business, and we are well underway building a stronger Macy’s for the future," he added.  

Macy's shares were marked 15.5% higher in early trading following the earnings release to change hands at $20.87 each, the highest since mid-March and a move that would extend the stock's year-to-date gain to around 84%.

Macy's smaller rival, Kohl's Corp.  (KSS) - Get Kohl's Corporation Report, also blasted Street forecasts with its second quarter earnings report, and boosted its full-year profit forecast to between $5.80 to $6.10 per share.

The Commerce Department's July report on U.S. retail sales showed a bigger-than-expected 1.1% decline from the previous month, but also noted that clothing and clothing accessories sales were up 43.4% from last year to around $17.779 billion.