Macy’s earnings outlook beats estimates, here's what to expect

Demand for high-end goods is persisting despite the highest inflation in four decades, according to Bloomberg-Macy s Inc.

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Earnings are now seen in the range of $4.53 to $4.95 a share this year, up from a prior forecast of $4.13 to $4.52, the department-store chain said Thursday. On average, analysts were looking for $4.36.

Higher pricing, lower promotions and changing shopping habits boosted margins in the three months ended April 30 and helped Macy s blow past earnings estimates in the quarter. The same-store sales at upscale Bloomingdale s and the cosmetics chain Bluemercury were more than twice as high as those at Macy s-brand stores.

Chief Executive Officer Jeffrey Gennette said in a statement that the shift back to occasion-based apparel and in-store shopping, as well as continued strength in sales of luxury goods, saw a shift back to occasion-based apparel and in-store shopping.

Macy's shares rose 13% at 8: 22 a.m. in early New York trading. The stock had slumped 27% through Wednesday s close this year, compared with a 25% drop for an index of mid-sized consumer discretionary companies.

The upbeat forecast gives investors some relief after Walmart and Target Corp. cut their outlooks last week, sparking a selloff in consumer stocks. The results show that there is a divergence among US consumers as high-income shoppers continue to open their wallets. Retailers that cater to more affluent clients, such as Nordstrom Inc. and Ralph Lauren Corp., reported better than expected results this week.

Macy s reported adjusted earnings of $1.08 a share in the first quarter, beating the 83 cent average estimate of analysts surveyed by Bloomberg. Same-store sales on an owned-plus licensed basis increased 12.4%, despite the 13.3% average analyst estimate, though Bloomingdale s and Bluemercury posted gains above 25% on that metric. The company's fiscal-year sales are expected to be $24.5 billion to $24.7 billion.

As companies try to get ahead of potential supply- chain snarls, swelling inventories have been a theme for retailers this earnings season. Macy s inventories were 17% higher than a year ago, according to Macy s. The increase is due to a shift in consumer spending away from athleisure and home goods as people go back to work, as well as loosening supply-chain constraints, as well as a shift in consumer spending away from athleisure and home goods.

Macy s is betting on e-commerce to boost sales, including starting an online marketplace to expand its product assortment and highlight third-party merchants. The digital business was up 2% last quarter compared to a year ago, according to the company.

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