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Macy's earnings top estimates, shares climb

Macy's reported third-quarter earnings that outpaced analysts' estimates, sending the stock higher Thursday morning. The retailer also reaffirmed its full-year outlook, as it saw improved gross margins due to better inventory control.

The department store chain's shares were climbing around 2 percent in premarket trade on the news.

Here's what Macy's reported, compared to what Wall Street was expecting, based on a Thomson Reuters survey of analysts:

  • Earnings of 23 cents a share, excluding items, compared with a forecast profit of 19 cents per share.
  • Revenue was $5.28 billion, versus an estimate of $5.31 billion.
  • Same-store sales fell 3.6 percent, compared to an anticipated decline of 2.6 percent.

"We expect continued improvement in our trends in the fourth quarter, including a solid lift from loyalty and digital, and intend to head into 2018 with momentum," Chief Executive Jeff Gennette said in a statement.

After reporting another quarterly same-store sales decline in August, Gennette told CNBC: Macy's "[isn't] ready to declare when we will get back to positive. ... When you look at what we did in the first half, we had to show sequential improvement, and we are on track for that."

The Ohio-based department store chain is trying to turn things around, with efforts focused on expanding Macy's off-price nameplate, Macy's Backstage, and revamping the retailer's loyalty program.

American department stores — including Macy's, J.C. Penney, Sears, Nordstrom and Kohl's — are struggling to keep pace with e-retailers that are successfully drawing more customers their way. The upcoming holiday season is a crucial time for traditional retailers.

Looking at the full year, Macy's has set expectations for comparable sales to decline by 2.2 to 3.3 percent. Total revenue is predicted by the department store chain to fall by 3.2 to 4.3 percent, while earnings are expected to land within a range of $3.37 to $3.62 per share.

Macy's "has seen significant pressure on sales/margins for several years, they no longer make much money as a retailer," Citi analyst Paul Lejuez wrote in a note to clients last month. Lejuez is calling for "another promotional holiday season" ahead. He proceeded to downgrade Macy's stock to sell from neutral at the end of October.

Macy's shares have fallen more than 50 percent in 2017 as of Wednesday's close.

This is a developing story. Please check back for updates.