REUTERS: Macy's Inc said stellar performance at its businesses helped push quarterly same-store sales and profit well above Wall Street estimates, signaling that the company was keeping up in a fiercely competitive retail landscape.
Macy's shares surged more than 13 percent in premarket trading after the company also raised its full-year profit forecast and issued a comparable sales growth guidance that topped estimates.
Shares of rival department stores J.C. Penney, Kohl's, Nordstrom and Target Corp also rose following the results.
Like its peers, Macy's has faltered in the past few years as it struggled to adjust to a market where shoppers increasingly buy goods online. The company closed more than 100 stores since 2015 and cut thousands of jobs as mall traffic plummeted and customers defected to off-price and fast-fashion sellers.
"Tax cuts, bonuses and good tax refunds have all been a windfall to consumers who have responded by increasing spending," said Neil Saunders, managing director of GlobalData Retail. "This rising tide has floated most retail boats, Macy's among them."
Macy's also said on Wednesday it would end a joint venture agreement with Fung Retailing Ltd in China, that it formed in 2015 with a 65 percent stake, but said it would remain active on Alibaba's e-commerce platform TMall as well as social media channels.
First-quarter same-store sales rose 4.2 percent, easily beating Wall Street's 1.4 percent average estimate, as sales rose at its Bloomingdale's, Bluemercury and its own Macy's stores. This was the second straight quarter of same-store sales growth.
The quarter also benefited from a change in accounting that shifted its Friends & Family promotional program from the second quarter to the first, the company said.
"We exceeded our expectations and saw strong performance across all three brands ... as well as across all geographic regions," Chief Executive Officer Jeff Gennette said.
The company said it now expects adjusted profit of US$3.75 to US$3.95 per share for the year, up from a prior forecast of US$3.55 to US$3.75.
It also forecast full-year comparable sales at its owned plus licensed stores to rise between 1 percent and 2 percent. Analysts on average were expecting 0.3 percent growth, according to Thomson Reuters I/B/E/S.
Net income attributable to Macy's shareholders nearly doubled to US$139 million, or 45 cents per share, in the first quarter ended May 5. Excluding one-time items, it earned 48 cents per share.
Net sales rose 3.6 percent to US$5.54 billion in the quarter.
Analysts on average were expecting earnings of 37 cents per share, and revenue of US$5.36 billion.
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Saumyadeb Chakrabarty)