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Home Depot, Macy's Q4 Results Beat View

homedepotmacy 25feb20 lt

Home Depot Inc. (HD) on Tuesday reported 5.8 percent increase in fourth-quarter profit, while Macy's Inc. (M) fourth-quarter profit fell 54.1 percent. However, the results of the companies beat analysts' estimates. The retailers have reaffirmed their annual outlook.

Shares of Home Depot increased 2 percent in the regular trade, as the the home-improvement retailer reiterated its fiscal 2020 outlook, and the quarterly results beat estimates. The company hiked quarterly dividend by 10 percent.

Home Depot still expects fiscal 2020 total sales growth of about 3.5 percent to 4.0 percent, and comparable sales growth of about 3.5 percent to 4.0 percent.

"We are now two years into our multi-year investment program and have more conviction than ever that our strategic initiatives are creating a value proposition that is unique to the marketplace and will extend our leadership position for years to come," said Craig Menear, chairman, CEO and president of Home Depot.

Net earnings for the fourth quarter of fiscal 2019 rose 5.8 percent to $2.48 billion, from last year's $2.34 billion, while earnings per share improved to $2.28 from $2.09 in the prior year. The prior year results included an extra week of operations that added about $0.21 per share.

On average, 29 analysts polled by Thomson Reuters expected the company to report earnings of $2.10 per share for the fourth-quarter. Analysts' estimates typically exclude special items.

But, quarterly net sales declined 2.7 percent to $25.78 billion from $26.49 billion in the fourth quarter of fiscal 2018. Analysts expected revenues of $25.76 billion for the fourth-quarter. The extra week of operations added about $1.7 billion of sales to the previous year.

Comparable sales for the fourth quarter of fiscal 2019 increased 5.2 percent, and comparable sales in the U.S. increased 5.3 percent.

The company said that its board approved a 10 percent increase in its quarterly dividend to $1.50 per share, which equates to an annual dividend of $6.00 per share. The dividend is payable on March 26, 2020, to shareholders of record on the close of business on March 12, 2020.

Meanwhile, Macy's reported that net income attributable to shareholders for the fourth-quarter plunged 54.1 percent to $340 million from $740 million last year, while earnings per share declined to $1.09 from $2.37 in the prior year.

"Taken as a whole, 2019 did not play out as we intended for Macy's, Inc. However, we executed well during the Holiday 2019 season. We were pleased with the significant trend improvement in the fourth quarter, including a meaningful sales up-tick in the 10 shopping days before Christmas," said Jeff Gennette, chairman and chief executive officer of Macy's, Inc.

Adjusted net income attributable to shareholders was $661 million or $2.12 per share compared to $850 million or $2.73 per share in the prior year. Analysts expected the company to report earnings of $1.96 per share for the fourth-quarter.

Revenue for the fourth-quarter declined 1.4 percent to $8.34 billion from $8.46 billion last year. Analysts expected revenues of $8.32 billion.

Quarterly comparable sales for owned plus licensed were down 0.5 percent, compared to an increase of 0.7 percent in the prior year. On owned basis, comparable sales were down 0.6 percent, compared to an increase of 0.4 percent in the previous year.

For fiscal 2020, the company continues to project adjusted earnings in the range of $2.45 to $2.65 per share; adjusted earnings, excluding asset sale gains, of $2.20 to $2.40 per share, and net sales of $23.6 billion to $23.9 billion. Wall Street analysts are currently looking for fiscal year 2020 earnings of $2.45 per share on annual revenues of $23.81 billion.

The company also expects comparable sales for owned plus licensed to decline 1.5 percent to 2.5 percent and owned basis to be about 40 basis points better than owned plus licensed.

HD is now trading at $243.55, up $3.85 or 1.61 percent.

M is currently trading at $15.79, up $0.34 or 2.20 percent.

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