Macy’s Inc Q3 2017 Earnings Report Reveals Mixed Results

Macy’s Q3 2017 earnings results were released before opening bell this morning, and the department store operator reported adjusted earnings of 23 cents per share on $5.28 billion in revenue. Analysts had been expecting adjusted earnings of 19 cents per share on $5.3 billion in sales. In last year’s third quarter, Macy’s reported $5.6 billion in revenue. The company said part of the year-over-year decline in sales was due to store closures.

macy's q3 2017 earnings
By Macy’s Inc./ Fairlyoddparents1234 [Public domain], via Wikimedia Commons

Macy’s Q3 2017 earnings

On a GAAP basis Macy’s Q3 2017 earnings per share rose to 12 cents from 5 cents per share last year. Comparable store sales fell 3.6% year over year on an owned plus licensed basis, which was much worse than the decline of 2.9% that had been expected. On an owned basis, same store sales declined 4% year over year.

“Importantly, we also saw better gross margin performance primarily due to our tightly controlled inventory position,” CEO Jeff Gennette said in a statement with the Macy’s Q3 2017 earnings release. “A highlight of the third quarter was the launch of the new Star Rewards loyalty program – our best customers are responding positively. We also saw continued double-digit growth in digital and are encouraged by the potential of Backstage in Macy’s stores.”

Macy’s reaffirms full-year outlook

Macy’s reaffirmed its previous guidance for the full year. The department store chain continues to expect comparable store sales to decline by 2.2% to 3.3% on an owned basis. On an owned plus licensed basis, Macy’s still expects comparable store sales to fall by 2% to 3%. The company looks for total sales to fall by 3.2% to 4.3% in fiscal 2017, which includes a 53rd week.

The company said again that it expects a benefit of 1 cent per share in adjusted earnings due to its merchandising operations restructuring. Macy’s now looks for full-year adjusted earnings to come in between $3.38 and $3.63 per share for the year. The company also expects a benefit from the sale of its Union Square Men’s building in San Francisco during the fourth quarter, so excluding that gain, it looks for adjusted earnings to be between $2.91 and $3.16 per share.

Following the Macy’s Q3 2017 earnings release, the company’s stock jumped by as much as 2.56% to $18.02 in premarket trades.