Macy's Shares Surge on Earnings Beat

NEW YORK ( TheStreet) -- Macy's ( M) shares were rising Wednesday on strong volume after the department store kicked off first-quarter earnings reports with better-than-expected earnings and announced a dividend increase.

The Cincinnati-based company said net income was $217 million for the 13-week quarter, or 55 cents per diluted share versus $181 million, or 43 cents in the same period last year. Analysts on average expected Macy's to post quarterly earnings of 53 cents a share.

First-quarter sales for the period totaled $6.39 billion, up 4% from the same period last year. Comparable stores sales, which includes stores open at least one year as well as e-commerce sales form Macys.com and Bloomingdales.com, rose by 3.8% from the first quarter last year, Macy's said.

Macy's stock jumped 3.2% shortly after the stock markets opened. The stock has since retreated, but still in positive territory, up 1% to $47.89. More than 5 million shares had already traded hands -- surpassing the stock's average daily trading.

Macy's said based on the positive momentum in its 840-store and online businesses as well as its "confidence in our future performance," it was raising its common stock dividend by 25% -- its third increase in the dividend in two years -- and authorizing a $1.5 billion increase in its share repurchase authorization.

"The first quarter demonstrated our ability to continue to build on our success over the past few years in growing sales and earnings," Macy's chairman, president and CEO Terry J. Lundgren, said in the earnings release.

Macy's was able to deliver the earnings beat despite the cool spring weather, particularly in the Northeast -- a factor that other retailers, including JC Penney ( JCP) and Target ( TGT) have already warned would hinder quarterly sales.

Still Lundgren noted that Macy's saw consumer weakness in the quarter "among some of the most budget-conscious consumers, as well as among our higher household income Bloomingdale's customers."

"We are continuing to pursue myriad new growth opportunities within our time-tested M.O.M. strategies (My Macy's, Omnichannel and Magic Selling). These strategies continue to work individually -- and in unison -- at Macy's to meet the needs of customers seeking fashion, quality, value and convenience," Lundgren said.

TJX Companies ( TJX), which owns TJ Maxx, Home Goods, Marshalls and Sierra Trading Post narrowed its earnings guidance for the first quarter, which also ended on May 4, to 61 cents to 62 cents per share, following strong same-store sales in the final four weeks of the quarter. TJX posted earnings per share of 55 cents in the April 2012 quarter.

The Framingham, Mass.-based company said last week that April sales 9% to $2 billion. Total quarterly sales rose 7% over the year prior to $6.2 billion. Still comparable store sales for the quarter rose just 2% compared to the year earlier period.

Wal-Mart Stores ( WMT), Kohl's ( KSS), JCPenney, TJX Companies and Nordstrom ( JWN) all report earnings on Thursday.

Macy's quarterly dividend is now 25 cents per share compared to 20 cents a share, previously. It's share repurchase program now totals $2.6 billion. Since resuming its share repurchase program in August 2011, Macy's has bought back approximately 60.3 million shares for approximately $2.2 billion through May 4, 2013.

Macy's reaffirmed its forecast for comparable sales growth of 3.5% this year. The company also reiterated its guidance for earnings per diluted share in fiscal 2013 of $3.90 to $3.95.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

>To submit a news tip, email: tips@thestreet.com.

Follow TheStreet on Twitter and become a fan on Facebook.
Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.