M Macys Inc

By Aisha Al-Muslim 

Macy's Inc. posted stronger-than-expected sales growth in the latest period as the retailer said it benefited from more customers making purchases through digital channels.

Sales at stores open at least a year grew 0.6% for the period ended May 4, above the FactSet estimate of a 0.6% decrease. Including licensed departments, same-store sales rose 0.7%.

Overall, the Cincinnati-based company reported Wednesday net sales for the first quarter fell less than 1% to $5.5 billion.

The company posted a profit of $136 million, or 44 cents a share, down from $139 million, or 45 cents a share, a year earlier. Excluding impairment and other costs, adjusted earnings were 44 cents a share, higher than the 33 cents a share that analysts polled by FactSet were looking for.

Macy's also affirmed its sales and earnings guidance for the current fiscal year. The company expects net sales to be roughly flat from the last fiscal year, with comparable sales to be flat to up 1%. Excluding settlement charges, impairment and other costs, the company forecasts adjusted earnings per share of $3.05 to $3.25.

The stock rose more than 4% to $22.74 in premarket trading. Shares are down 27% in the past year.

In February, Macy's signaled 2019 would be a challenging year, predicting sales wouldn't grow and announcing another round of cost cuts. The company said it would streamline senior management as part of a plan to save $100 million a year, resulting in the elimination of 100 jobs.

Last month, reports surfaced that Macy's might build an office tower on top of its flagship Herald Square store in New York.

In April, Macy's said it would bring its Story concept shop to 36 stores in 15 states. Macy's acquired Story in May 2018, which at the time was a New York City location with a rotating store design and merchandise every four-to-eight weeks.

The retailer operates about 680 department stores under the Macy's and Bloomingdale's names, and nearly 190 specialty stores that include Bloomingdale's The Outlet, Bluemercury, Macy's Backstage and Story.

Retailers could soon feel the pain as trade tensions rise. Last week, 25% tariffs on more than $40 billion of goods that are imported from China took effect, affecting clothing, luggage, handbags and furniture, among other consumer products. In response, merchants may have to decide whether to absorb the added costs of the new tariffs themselves, spread them across their vendors or pass them on to consumers.

The tariffs come as retailers' profit margins are already under pressure as they spend on upgrading their digital capabilities and remodeling their stores.

Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com

(END) Dow Jones Newswires

May 15, 2019 09:27 ET (13:27 GMT)

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