Department store chain Macy's Inc. (M) on Wednesday reported a 20 percent increase in profit for the first quarter on higher revenues and comparable sales growth despite unseasonably cool spring weather. Earnings per share beat analysts' expectations, while revenues matched their estimates.
Looking ahead, Macy's affirmed its financial forecast for fiscal 2013. The company also announced a 25 percent increase in its dividend on common stock and a $1.5 billion increase in its share repurchase authorization.
Terry Lundgren, chairman, president and chief executive officer of Macy's said, "We are especially pleased with our first quarter sales and earnings performance given the challenges we overcame in this period. These included sustained, unseasonably cool spring weather in our northern climate zones. In addition, we saw weakness among some of the most budget-conscious consumers, as well as among our higher household income Bloomingdale's customers."
Comparable sales for the quarter rose 3.8 percent from the prior-year period. Comps is a key retail industry performance metric to gauge activity at store locations that have been open for at least a year.
Cincinnati, Ohio-based Macy's first-quarter net income was $217 million or $0.55 per share, up from $181 million or $0.43 per share in the year-ago period. On average, fifteen analysts polled by Thomson Reuters expected the company to earn $0.53 per share for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter rose 4 percent to $6.39 billion from $6.14 billion in the prior-year quarter. Analysts had a consensus revenue estimate of $6.39 billion.
Gross margin was flat with the year-ago period at 38.8 percent.
Macy's board authorized an increase in the quarterly dividend on common stock to $0.25 per share from the current $0.20 per share. The new dividend will be payable on July 1 to shareholders of record at the close of business on June 14.
The board also increased the company's share repurchase authorization by $1.5 billion. After giving effect to this increase, this brings the remaining authorization outstanding as at the end of the first quarter to about $2.6 billion.
Since resuming its share repurchase program in August 2011, Macy's had bought back about 60.3 million shares for approximately $2.2 billion through May 4, 2013.
On May 10, Macy's entered into a new $1.5 billion, five-year credit agreement that will mature on May 10, 2018. It replaces a previous $1.5 billion facility maturing in June 2015.
Looking ahead to fiscal 2013, Macy's affirmed its outlook for same-store sales growth of about 3.5 percent and earnings per share in a range of $3.90 to $3.95. Analysts expect the company to report earnings of $3.92 per share for the year on revenues of $28.35 billion.
M closed Tuesday's trading at $47.39. In Wednesday's pre-market, the stock is up $0.76 or 1.60 percent to $48.15.
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