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Macy 's on Thursday reported third-quarter earnings and sales beating analysts ", leading the department store chain to raise its forecasts forrl 'the whole year before the holidays.
Separately, the company announced the launch of a digital market which is expected to start in the second half of 2022, and said it has hired the company AlixPartners advisory to review its business structure.
Macy's shares ended the day up 21.1%. At one point, the stock hit a three-year high of $ 37.95.
The announcements are made by the activist " Jana Partners took a stake in the company and pressured Macy 's to is splitting its e-commerce business from its stores, hoping to achieve greater valuation. Saks Fifth Avenue pursued a similar split earlier this year. Its e-commerce unit is now reportedly preparing for a "introduction on the stock exchange at a higher valuation than it saw after its spin out of the Saks stores.
"We also recognize the significant value that the market places on pure ecommerce businesses "said Macy's chief executive Jeff Gennette on a results conference call. "And as we take a look at the landscape today, we are undertaking additional analysis that may help inform our long-term strategy to unlock more value for Macy 's.
Higher profit estimates
Under Gennette, Macy 's tried to appeal to young consumers who might have strayed from shopping in traditional department stores. He said Macy 's added 4.4 million new customers during the quarter and benefited from an "improved business environment ". do not expect to be hurt by bare shelves hangingThis is the critical holiday shopping season.
"We expect supply chain issues to continue through 2022, " he mentioned. "Some categories are much better, some [challenges] persist. But I think overall we have a pretty good grasp of how we cope with that.
Here's how Macy's at during the three-month period ended Oct. 30 compared to what analysts expected, based on a Refinitiv survey:
- Earnings per share: $ 1.23 adjusted vs. 31 cents expected
- Revenues: $ 5.4 billion vs. $ 5.2 billion expected
Macy 's reported net profit of $ 239 million , or 76 cents per share, compared with a loss of $ 91 million, or 29 cents per share, a year earlier. Excluding one-off items, the company gained $ 1.23 per share, much better than the 31 cents analysts had predicted.
Sales have aincreased to $ 5.4 billion from $ 3.99 billion a year earlier. This topped estimates by $ 5.2 billion.
Macy 's reported comparable sales growth, on a owned and licensed basis, of 35.6% in the quarter. Analysts were expecting 29.3% growth, according to Refinitiv estimates.
Digital sales up 19 %
Digital sales increased 19% year-over-year and 49% on a two-year basis. The company said its online business accounted for 33% of total sales, up 10% from 2019 levels. And 41% of Macy's new customers went digital in the third quarter.
At Bloomingdale 's, comparable sales on a owned and licensed basis increased 38.5% year-over-year. The company said buyers with more money to spend were buying productsLuxury handbags, fine jewelry, shoes and men's clothing.
"It's very hot right now, " Gennette said in a phone interview about the luxury market. "Customers are prepared to devote a greater portion of their disposable income to brands for the future.
He said the company also expects spending from retailers to pick up. international tourists, on their return to the United States. , which should help its luxury business even more. The return of foreign buyers to Macy's stores will likely be between 2022 and 2023, he said.
Gennette said the company has been successful in bringing back old customers and finding new buyers during the pandemic "coronavirus . A link "with Toys R Us helped veMacy's toy numbers more than double from 2019 levels, he mentioned. And the company is seeing some crossover of competitors that have shut down, according to Gennette.
Macy 's now sees 2021 revenue of between $ 24.12 billion and $ 24.28 billion. dollars, up from a previous range of $ 23.55 billion to $ 23.95 billion. billion dollars.
Full-year adjusted earnings per share are expected to reach $ 4.57 to $ 4.76, from a previous forecast of $ 3.41 at $ 3.75.
Analysts were looking for adjusted earnings per share. of $ 3.89 on sales of $ 23.78 billion.
Department Store Operator Kohl 's also on Thursday, raised "its outlook for the year , sending its shares up10.6% on the day.
Adding a digital market
En Meanwhile, Macy's planned digital marketplace will allow third-party merchants to sell their items on Macy 's and Bloomindales websites. The company said it is working with technology provider Mirakl to power the platform. According to Gennette, this has been in the works for at least a year.
Macy's digital director and customer Matt Baer said the market would help re Tailer expand its product assortment at a lower cost. . The company is targeting $ 10 billion in online revenue by 2023, but that market is expected to add more additional sales, Baer said.
Bed " Bath & Beyond announced earlier this month its intention to launch " a similar market tothird party to sell items on its site. It 's an effort to mimic the markets that companies like Amazon , Walmart and Target have already done so. But it's unclear whether these retailers will be so successful.
GlobalData chief executive Neil Saunders says launching an online marketplace could end up amplifying calls for Macy's split. 's. its e-commerce business.
"One possible danger in the market is that it will reduce overlap between stores and online " Saunders said.
The founder de Jana and managing partner Barry Rosenstein said in an emailed statement that the activist group applauds Macy's latest results.
"No"We appreciate Macy's strong execution during the quarter and commend the board for its speed in engaging advisors to undertake a review of ways to unlock value from its strong e-commerce business," he said. .
Jana 's interest in Macy ' s stock has given the share retailer a boost. As of Thursday's close, its stock has risen more than 232% year-to-date, bringing its market value to $ 11.6 billion.
Check out the full press release from Macy 's here .