14 May Macy’s Q1 Earnings Dip
Macy’s, Inc. reported first-quarter earnings slid 13.8 percent. Same-store sales dipped 0.1 percent, lower than planned due to delays caused by the West Coast port slowdown, extreme winter weather and lower international tourist spending.
Macy’s, Inc. (NYSE:M) today reported earnings of 56 cents per diluted share for the first quarter of 2015, the 13-week period ended May 2, 2015, compared with earnings of 60 cents per diluted share in the first quarter of 2014. The company also announced a 15 percent increase in its dividend on common stock and a $1.5 billion increase in its share repurchase authorization.
“We had expected our first quarter sales to grow at a rate lower than our guidance for the full year. We fell short because of a confluence of factors,” said Terry J. Lundgren, Macy’s, Inc. chairman and chief executive officer. “Delayed merchandise shipments from the West Coast port slowdown and severe winter weather early in the quarter restrained business levels. Moreover, sales were negatively affected by lower levels of spending by international tourists visiting major U.S. cities with flagship Macy’s and Bloomingdale’s stores, including New York City, Chicago, Las Vegas and San Francisco. The omnichannel reorganization in our merchandising, planning and marketing organizations announced in January and February also caused some temporary disruption as executives in those areas learned new roles and procedures. Fortunately, most of these short-term issues are largely behind us.
“Looking ahead, we have many reasons to be encouraged about the growth prospects for our business. We are excited by the range of new initiatives being put in place today – both organic and through our new business development organization. Within our existing business, this includes an intensification of focus in our Top 150 stores, major growth trends in active categories and accelerating success in dresses, the vanguard merchandise category in our omnichannel reorganization. The launch of our new Plenti loyalty rewards program last week was very strong, far exceeding our expectations. Our new Thalia Sodi private brand in ready-to-wear, shoes and fashion jewelry clearly is resonating with customers and selling very well,” Lundgren said.
“We also are seeing new business initiatives begin to germinate. We are looking forward to the planned launch of the Macy’s Backstage off-price business this fall, with the first four pilot locations announced last week. We have already learned a great deal about the specialty beauty channel and spa business through our acquisition of Bluemercury, and we are excited about plans to accelerate the expansion of Bluemercury through its free-standing stores, omnichannel presence and private brand placement within Macy’s beauty departments. While these new growth initiatives are early in development, we are moving fast to test, learn and bring the most successful ideas to scale quickly,” he added.
Sales in the first quarter of 2015 totaled $6.232 billion, a decrease of 0.7 percent, compared with sales of $6.279 billion in the same period last year. Comparable sales on an owned plus licensed basis were down by 0.1 percent in the first quarter. On an owned basis, first quarter comparable sales declined by 0.7 percent.
Since February 1, 2015, four new Bluemercury stores have opened.
Macy’s, Inc.’s operating income totaled $409 million or 6.6 percent of sales for the first quarter of 2015, compared with $443 million or 7.1 percent of sales for the same period in 2014.
Net cash provided by operating activities was $53 million in the first quarter of 2015, compared with $174 million in the first quarter last year. Net cash used by investing activities in the first quarter of 2015 was $381 million, compared with $184 million a year ago. Investing activities in the first quarter of 2015 included the acquisition of Bluemercury. Net cash used by financing activities in the first quarter of 2015 was $409 million, compared with $385 million last year.
The company repurchased approximately 5.9 million shares of its common stock for a total of approximately $385 million in the first quarter of 2015.
Macy’s, Inc.’s board of directors has authorized an increase in the quarterly dividend on Macy’s common stock to 36 cents per share from the current 31.25 cents per share. The new dividend will be payable July 1, 2015, to shareholders of record at the close of business on June 15, 2015.
This represents the fifth increase in the dividend in the past four years. Over that period, the quarterly dividend has increased more than seven-fold from 5 cents per share to 36 cents per share.
Increased Share Repurchase Authorization
The board also has increased the company’s share repurchase authorization by $1.5 billion. This brings the remaining authorization outstanding, as of the end of the first quarter on May 2, 2015, after giving effect to this increase, to approximately $2.1 billion, which the company can use to purchase common shares in the open market, in privately negotiated transactions or otherwise at any time and from time to time without prior notice.
Since resuming its share repurchase program in August 2011, Macy’s, Inc. had bought back approximately 123.3 million shares for approximately $5.7 billion through May 2, 2015.
Macy’s, Inc. continues to expect comparable sales growth on an owned plus licensed basis of approximately 2 percent in fiscal 2015, with comparable sales slightly lower on an owned basis. The company continues to expect total sales growth of approximately 1 percent in 2015. The company also reiterated its guidance for earnings per diluted share in fiscal 2015 of $4.70 to $4.80.
In fiscal 2015, as previously announced, the company expects to open a new Macy’s store in Ponce, PR, a Bloomingdale’s in Honolulu, HI, a new Bloomingdale’s Outlet store in Manhattan, four Macy’s Backstage off-price stores in the New York metro area, and a total of 18 Bluemercury locations (including four opened in the first quarter). For fiscal 2016, a new Macy’s store has been announced for opening in Kapolei, HI, along with a replacement Macy’s store in Los Angeles, CA. Announced new stores for fiscal 2017 include new Macy’s and Bloomingdale’s in Miami, FL, and a new Bloomingdale’s in San Jose, CA. In 2018, a new Bloomingdale’s is scheduled to open in Norwalk, CT. In addition, new Macy’s and Bloomingdale’s stores are planning to open in Abu Dhabi, United Arab Emirates, in 2018 under license agreements with Al Tayer Group.