Department store chain Macy's Inc. (M) and luxury retail chain Saks Inc. (SKS) on Tuesday reported higher profits for the fourth quarter. The results of both the companies benefited from higher comparable store sales, a surge in online sales, and one-time gains.
Amid improved consumer sentiment, Macy's results benefited from strong holiday spending, while Saks benefited from a rebound in demand for luxury items.
Macy's sales matched analysts' expectations, while Saks earnings and sales beat their estimates. Both the companies project higher same-store sales for fiscal year 2012.
Macy's same-store sales for the quarter rose 5.2 percent. Comparable-store sales or comps is a key retail industry performance metric to gauge activity at store locations that have been open for at least a year.
Saks' comparable store sales rose 7.7 percent in the quarter, in line with the company's expectations. This was on top of an 8.4 percent increase in comparable store sales in the year-ago period.
Sakes said that at the Saks Fifth Avenue stores, several merchandise categories showed strength during the fourth quarter. These include women's and men's contemporary apparel, handbags, fine jewelry, fragrances, and men's accessories.
Both Macy's and Saks reported higher online sales in the quarter. Macy's online sales grew 40 percent. Saks Direct, which sells online, reported a 21 percent increase in sales for the quarter.
Macy's fourth-quarter net income rose to $745 million or $1.74 per share from $667 million or $1.55 per share in the year-ago period.
Excluding items, adjusted earnings per share rose to $1.70 from $1.59 in the prior-year quarter. On average, analysts polled by Thomson Reuters expected earnings of $1.65 per share. Analysts' estimates typically exclude special items.
Macy's net sales for the quarter grew 5.5 percent to $8.72 billion from $8.27 billion in the prior-year period and matched analysts' consensus estimate.
Meanwhile, Saks' fourth-quarter net income was $36.98 million or $0.21 per share, up from $24.98 million or $0.14 per share in the year-ago period.
Excluding one-time gains, adjusted earnings rose to $0.17 per share from $0.13 per share in the prior-year period. Analysts expected the company to earn $0.14 per share.
Net sales grew 6.8 percent to $925.10 million from $866.33 million in the year-ago period, beating analysts' estimate of $919.45 million.
Looking ahead to fiscal 2012, Macy's expects earnings per share in a range of $3.25 to $3.30. Analysts expect the company to earn $3.26 per share for the year.
The company forecasts same-store sales growth for the year of about 3.5 percent, and projects sales at its online business to exceed $2 billion.
Saks projects comparable store sales growth for fiscal year 2012 in a range of 5 percent to 7 percent, and gross margin rate to be modestly above the 40.8 percent rate achieved in 2011.
Saks said it will no longer report quarterly comparable store sales performance for Saks Direct, beginning in the first quarter of fiscal 2012. The company noted that the decision is consistent with its omni-channel approach to the business.
In Tuesday's regular trading, M is trading at $37.28, up $1.03 or 2.86 percent on a volume of 1.77 million shares. SKS is trading at $11.60, up $0.73 or 6.72 percent on a volume of 549,971 shares.
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