Macy’s, Inc. Stock Slips After Earnings Disappoint

Macy’s released the earnings results from its first fiscal quarter before opening bell this morning, posting earnings of 56 cents per share on sales of $6.23 billion, a 0.7% year over year decline. Analysts had been looking for earnings of 62 cents per share and revenue of $6.32 billion. In the same quarter last year, Macy’s reported earnings of 60 cents per share on $6.28 billion in sales.

Macy's, Inc. Stock

Key metrics from Macy’s earnings report

Comparable store sales at owned plus licensed locations slipped by 0.1% during the quarter, while owned store comparable sales fell by 0.7%. Operating income was 6.6% of sales at $409 million, compared to last year’s 7.1% of sales or $443 million. Net cash flow plunged from $174 million last year to $53 million in the first quarter of this year.

Macy’s management said the company missed their expectations because of several factors, including delays in shipments of merchandise caused by the slowdown at the West Port. Also severe winter weather early in the first quarter dragged on sales, which were also hit by international tourists spending less at Macy’s and Bloomingdale’s stores in Chicago, New York City, San Francisco, Las Vegas and other major cities.

Macy’s ups capital returns

This morning Macy’s also announced that it was raising its dividend 15% to 36 cents a share. The current dividend is 31.25 cents per share. The next dividend will be payable on July 1 to shareholders of record on June 15.

The department store chain also increased its share repurchase program by $1.5 billion, bringing the total repurchase authorization up to about $2.1 billion. Macy’s bought back 5.9 million common shares for about $385 million during the quarter.

Macy’s management maintained their guidance of a 2% increase in comparable store sales at owned plus licensed locations for the 2015 fiscal year. They expect sales to be “slightly lower” at owned stores.  They expect about a 1% increase in total sales for the full year and earnings of between $4.70 and $4.80 per share for the full year.