Macy's Shares Jump on Signs That a Turnaround Is Working

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Shares of Macy's Inc surged more than 10% in premarket trading on Wednesday after the company reported first quarter earnings that finished above Wall Street estimate.

Headquartered in Cincinnati, Ohio, M recorded net sales that rose 4% to $ 5.54 billion from $ 5.35 billion in the same quarter past year. The company reported $0.42 earnings per share for the quarter, beating analysts' consensus estimates of $0.35 by $0.07, Bloomberg Earnings reports. The retailer's comps were more than three percentage points higher than the FactSet consensus of 0.7%, cited by MarketWatch, and top-line sales were more than $10 million higher than the FactSet consensus of $5.43 billion. Also apart from asset sale gains, earnings per diluted share attributable to Macy's, Inc. were $0.42 in the first quarter of 2018.

Same Store Sales - Perhaps the most impressive line on the report had to do with same store sales.

The company also saw a boost from worldwide tourism but said it would be ending its joint venture with Fung Retailing Limited in China. Analysts were calling for earnings of $3.61 a share.

Gennette, who took over for longtime Macy's CEO Terry Lundgren in March 2017, added that consumer spending remained "healthy" and that there were "significant improvements in worldwide tourism". The Macy's e-commerce team in San Francisco will manage the ongoing China business with operational support from Fung Omni in Shanghai. "While we have more work to do, the continuing improvement in our stores is encouraging and we once again achieved double-digit growth in the digital business".

Gennette's projected optimism wasn't just rhetorical.

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Macy's said it earned 48 cents per share in the first quarter on revenue of $5.54 billion, which exceeded expectations of 35 cents per share and $5.39 billion.

The sunny earnings report follows a week where some analysts sounded pessimism about the sector.

With BOPIS (buy online/pickup in store) expanding, Macy's is also adding At Your Service counters for easy order pick up. BMO Capital Markets set a $38.00 target price on Macy's and gave the stock a "buy" rating in a research report on Friday, January 5th.

But, for now, Macy's turnaround efforts appear to be bearing fruit as they continue into 2018. It wants to bring Macy's Backstage to the West Coast and it recently bought Story, a New York City concept store.

But even as the company posts winning numbers in Q1, there are still unanswered questions hanging over the retailer in the long run. Yet it was also driven by Macy's decision to shift its "Friends & Family" sale from the second-quarter to the first. Further, it has been operating in a friendly economy environment, marked by strong consumer sentiment and spending, he said. The company said some of its best-selling categories were fine jewelry and dresses.

Last week, Macy's opened up its loyalty program to all customers, which used to be limited to the chain's credit card holders. "On top of all of this, competition remains tough".

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