Post Earnings Coverage as Macy’s Q3 Topline Outperformed Market Expectations

Upcoming AWS Coverage on Kohl’s Post-Earnings Results

LONDON, UK / ACCESSWIRE / November 18, 2016 / Active Wall St. announces its post-earnings coverage on Macy’s, Inc. (NYSE: M). The company reported its third quarter fiscal 2016 (Q3 FY16) earnings on November 10, 2016. The Cincinnati, Ohio-based company reported a 4.2% y-o-y decline in its net sales; however, net sales still beat consensus market estimates. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Macy’s competitors within the Department Stores space, Kohl’s Corp. (NYSE: KSS), reported on November 10, 2016, its results for the three and nine month periods ended October 29, 2016. AWS will be initiating a research report on Kohl’s in the coming days.

Today, AWS is promoting its earnings coverage on M; touching on KSS. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=M

http://www.activewallst.com/registration-3/?symbol=KSS

Earnings Reviewed

During Q3 FY16, Macy’s reported net sales of $5.63 billion compared to $5.87 billion in Q3 FY15. Net sales numbers for Q3 FY16 came in marginally above market expectations of $5.62 billion. In the reported quarter, comparable sales on an owned plus licensed basis dipped 2.7% y-o-y, whereas on an owned basis, comparable sales were down 3.3% y-o-y. The decline in quarterly sales was primarily attributed to the closure of 41 underperforming Macy’s stores at the end of fiscal 2015.

The department store retailer’s net income attributable to its shareholders came in at $17 million, or $0.05 per diluted share, for Q3 FY16 versus $118 million, or $0.36 per diluted share, in the prior year’s comparable quarter. Excluding impairments and other costs and settlement charges, Macy’s earnings attributed to its shareholders came in at $0.17 per diluted share for Q3 FY16 compared to $0.56 per diluted share in Q3 FY15. Additionally, Wall Street had expected the company to report adjusted earnings of $0.40 per diluted share.

Karen M. Hoguet, Chief Financial Officer of Macy’s, during earning the conference call stated:

“We are pleased with our third quarter performance, which was consistent with our expectations. As we have said all year, we are in the process of setting ourselves up for a comeback, and we remain on that path.”

Operating Metrics

The company’s Q3 FY16 gross profit was $2.24 billion compared to $2.34 billion in the prior year’s quarter. Gross margin as a percentage of net sales for both quarters came in at 39.8%. In Q3 FY16, operating income fell to $107 million from $258 million in Q3 FY15. The company’s operating margin also declined to 1.9% of net sales in Q3 FY16 from 4.4% of net sales in the year ago quarter. Furthermore, excluding non-cash settlement charges related to the company’s retirement plans, Macy’s operating income for Q3 FY17 came in at $169 million, or 3.0% of net sales, compared to $369 million, or 6.3% of net sales, in Q3 FY15.

Balance Sheet

In the first nine months ended October 29, 2016, net cash provided by operating activities was $308 million compared to $278 million in the first three quarters of FY15. As on October 29, 2016, the company had $457 million in cash and cash equivalents compared to a balance of $474 million as on October 31, 2015. Additionally, the company reported long-term debt of $6.56 billion in its books of accounts as on October 29, 2016, compared to $7.08 billion as on October 31, 2015.

Dividends and Share Repurchases

In a separate press release on October 28, 2016, Macy’s Board of Directors announced a regular quarterly dividend of $0.3775 per share which will be paid on January 03, 2017, to all shareholders registered on records as of the close of business on December 15, 2016.

During Q3 FY16, Macy’s repurchased approximately 3 million shares of its common stock for a total of approximately $108 million. Furthermore, in the first nine month of FY16, the company had bought back approximately 6 million shares of its common stock for approximately $238 million. As on October 29, 2016, the company had a balance of approximately $1.8 billion under its share repurchase authorization.

Earnings Outlook

Macy’s reaffirmed its full year FY16 earnings-per-share guidance and expects diluted earnings per share (excluding asset impairment charges and retirement settlement charges) to be in a range of $3.15 to $3.40. The company increased its sales guidance to an annual decline in the range of 2.5% to 3% on an owned plus licensed basis versus prior sales decline guidance range of 3% to 4%.

Stock Performance

On Thursday, the stock closed the trading session at $43.05, climbing 2.89% from its previous closing price of $41.84. A total volume of 6.28 million shares have exchanged hands, which was higher than the 3-month average volume of 6.25 million shares. Macy’s stock price advanced 20.96% in the last month, 7.97% in the past three months, and 40.66% in the previous six months. Furthermore, since the start of the year, shares of the company have gained 26.85%. The stock is trading at a PE ratio of 17.29 and has a dividend yield of 3.51%.

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