English: Macy's Department Store in New York City. (Photo credit: Wikipedia)Is it an early miracle on 34th street? Retail company Macy's (which also owns Bloomingdale's) reported strong third quarter earnings Wednesday morning, beating the other street - Wall Street, that is - on profit and earnings. As a result, its shares are soaring by over 7% in pre-market activity.
The company reported third quarter revenue of $6.28 billion, coming in above analyst consensus of $6.18 billion and representing a 3.3% increase over the same quarter in 2012. Third quarter net income came in at $177 million, resulting in earnings of 47 cents per share, a 31% increase over this time last year and easily topping Street predictions of 38 cents per share.
Macy's chairman and CEO Terry Lundgren said the results are particularly notable given the 'tepid economic climate' of the quarter, which ended on November 2 and therefore included consumer spending that occurred during the government shutdown in October. He attributed the increases in profit and revenue to a marketing push. '[B]usiness in the third quarter benefited from intensified marketing strategies to emphasize the outstanding value in our merchandise deliveries,' Lundgren said in a statement Wednesday morning. 'Both Macy's and Bloomingdale's performed well in the quarter, and we saw improvement in the sales trend in every region of the country compared with the spring season.'
Operating income came in at $360 million, or 5.7% of sales compared to operating income of $325 million or 5.4% of sales this time last year.
On a comparable sales basis, sales were up 3.5% for the quarter compared to 2.2% this time last year. Comparable sales include include net sales from stores open at least one full fiscal year, as well as online sales at macys.com and bloomingdales.com.
The company reiterated its guidance for the remainder of 2013, saying that comparable sales are expected to increase in the range of 2.5% to 4% in the second half of 2013, and increase somewhere from 2% to 2.9% for the full-year-2013. Earnings for fiscal 2013 are expected in the range of $3.80 to $3.90 per diluted share.
'Our business improved during the quarter, with particular strength in October, so we are entering the fourth quarter with confidence,' Lundgren said, adding that fourth quarter success will be driven by a wide selection from in-demand brands and designers and that customer needs will be supported by the 83,000 seasonal workers hired specifically for the holiday season.
Macy's shares surged following the release of the earnings report, soaring more than 7.5% in pre-market trading Wednesday morning. Meanwhile, competitor JC Penney was up 2% in pre-bell activity, while competitors Dillard's, Sears and Target were flat.
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