VOL. 125 | NO. 220 | Thursday, November 11, 2010
Local Push Puts Macy's Back in Black in Q3
ANNE D'INNOCENZIO | AP Retail Writer
NEW YORK (AP) – Macy's Inc. turned a profit in the third quarter after a loss a year ago, boosted by tailoring merchandise to local markets and higher spending from wealthier customers at its Bloomingdale's chain.
Macy's has benefited from its localization plan, which puts decisions on what merchandise to stock closer to customers. Its fashion exclusives have also helped bring in new shoppers. The company has said that its moderately priced Material Girl, a trendy teen clothing collection created by pop star Madonna and her 13-year-old daughter Lourdes, has been a home run.
Meanwhile, affluent shoppers, buoyed by a rallying stock market, have started to go back to spending. That has helped its upscale Bloomingdale's chain.
Macy's said Wednesday that it earned $10 million, or 2 cents per share, for the period ended Oct. 30. That compares with a loss of $35 million, or 8 cents per share, a year ago.
Excluding certain items, Macy's earned 8 cents per share for the latest quarter.
Macy's said its revenue rose 6.6 percent to $5.6 billion. The department store posted a 3.9 percent gain in revenue at stores opened at least a year, a measure that's considered key in evaluating the health of a retailer.
Analysts surveyed by Thomson Reuters had expected 5 cents per share on revenue of $5.56 billion.
"Throughout 2010, we have gained confidence and momentum as customers have responded favorably to our execution of key strategies developed and activated over the past few years," Terry J. Lundgren, chairman, CEO and president of Macy's, said in a statement. "This bodes well for our business as we enter the holiday selling season."
In fact, while Macy's rolled out its localization plan to all of its stores last year, the company is also giving it a holiday spin. Across the country, Macy's is offering 2,200 themed ornaments with a local flavor, from Elvis ornaments in Tennessee to Texas-themed martini glasses.
With middle-income shoppers expected to keep a lid on spending through the holidays, Macy's is expected to continue to steal shoppers from rivals like J.C. Penney Co. Penney is due to release third-quarter earnings Friday, and Kohl's Corp. on Thursday.
However, among shoppers with more money, luxury spending is shining again. Polo Ralph Lauren Co. on Wednesday raised its revenue outlook, saying it now expects a low-double digit percentage increase in 2011 revenue because of better second-quarter sales.
Macy's said it expects earnings between $1.94 and $1.99 per share for the full year. That compares with previous guidance of between $1.89 and $1.94 per share. Analysts had expected $1.96. It had boosted its second-half earnings outlook last week.
Macy's also boosted its outlook on Wednesday for revenue at stores open at least a year for the second half. It now expects that measure to be up between 3.3 percent and 4 percent. That compares with an earlier outlook for an increase of 3 percent to 3.5 percent offered in August.
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