Macy’s Inc. surged after reporting improvements to its sales, including at its brick-and-mortar locations. The company said its strategic turnaround plan is on track to deliver “long-term profit growth.”
Same-store sales for owned as well as licensed stores gained 0.7% in the company’s latest quarter, the sixth consecutive gain. That’s better than analysts’ projections, according to Consensus Metrix. Macy’s also said it had another quarter of double-digit online sales growth.
Key insights
Macy’s current mission is to cut costs, and Chief Executive Officer Jeff Gennette says the plan is “making progress.’’ Shareholders like cost-cutting, but some analysts had been wondering whether it would also be making the big changes needed to fuel top-line growth. This set of results suggests it’s doing just that. The chain has been experimenting with different ways to use its real estate, including its Story pop-up concept to attract younger shoppers and its Backstage discount concept. Gennette said those kinds of new ideas helped support growth in the quarter, leading to a sequential improvement in brick and mortar sales. In terms of thinking outside the box, Macy’s has also held preliminary discussions with New York City officials about building a skyscraper on top of its flagship store in Manhattan’s Herald Square. It may give more details on its call later this morning.
Market reaction
The shares rose as much as 4% to $22.68 in New York Wednesday. They had dropped 27% this year through Tuesday’s close, in contrast with the 13% gain in the S&P 500 Index.
—Bloomberg News
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