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Macy's Stock Surges To 3-Year High After Q3 Earnings Beat, Outlook Boost

Macy's blasted Street earnings forecasts Thursday thanks to a 9% surge in same-store sales from 2019 levels and the addition of 4.4 million new customers into its brand.

Macy's  (M) - Get Macy's Inc Report posted stronger-than-expected third quarter earnings Thursday, while lifting its full-year sales and profit guidance, as U.S. department stores follow larger big-box retailers with inflation-defying sales gains and holiday-quarter outlooks.

Shares surged to a three-year high, as well, amid data showing the retailer had lifted its quarterly inventories by 19.4% as it stocked-up for a robust holiday season and said it was reviewing plans to spin-off its e-commerce business. 

Macy's said adjusted earnings for the three months ending in October, the group's fiscal third quarter, came in at 76 cents per share, up from a loss of 19 cents per share over the same period last year and more than double the Street consensus forecast of 31 cents per share. Group net sales, Macy's said rose 36.3% to $5.44 billion, again topping analysts' estimates of a $5.2 billion tally. 

Looking into the 2022 financial year, Macy's said it sees net sales in the region of $24.1 billion to $24.3 billion, up from $23.55 billion to $23.95 billion with adjusted earnings in the range of $4.57to $4.76 per share.

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“Our company delivered another strong quarter and exceeded our expectations on both top and bottom lines. The results were driven by the effective execution of the Polaris strategy and an improved economic environment. In the quarter, the Macy’s brand added 4.4 million new customers," said CEO Jeff Gennette. "Consumers continue to spend, and we successfully offered a wide range of expanding merchandise assortment to meet their growing demand.” 

“Looking ahead to the fourth quarter, we remain a special place for holiday shopping, and our robust omnichannel ecosystem is showing resilience in the face of labor and supply chain challenges and enables us to meet customer shopping needs with speed and convenience,” he added.  

Macy's shares ended the session 21.21% higher to close at $37.37 each, the highest in more than three years and a move that extends their year-to-date gain to around 233%.

U.S. retail sales jumped for a third consecutive month in October, data from the Commerce Department indicated Tuesday, rising 1.7% to a collective $638.2 billion as consumers continue to shrug-off surging inflation pressures thanks in part to job market gains and improving wages.

Inflation continues to hover over the retail sector, however, after consumer price inflation accelerated to the fastest pace in three decades last month as record-high energy prices and supply chain disruptions lifted the heading reading to 6.2%.