Macy's increases full-year earnings guidance

14 Nov '11

6 min read

In the third quarter, the company opened new Bloomingdale's Outlet stores, as previously announced, in Estero, FL, and Wrentham, MA. A third new Bloomingdale's Outlet store in Schaumburg, IL, opened in the first week of the fourth quarter. A Macy's furniture gallery in Wayne, NJ, remains closed temporarily after flood damage in the third quarter.

Operating Income
Macy's, Inc.'s operating income totaled $291 million or 5.0 percent of sales for the quarter ended Oct. 29, 2011, compared with operating income of $177 million or 3.1 percent of sales for the same period last year. For the first three quarters of 2011, Macy's, Inc.'s operating income totaled $1.127 billion or 6.4 percent of sales, compared with operating income of $750 million or 4.5 percent of sales for the same period last year.

Tax Settlements
Several normal-course state tax settlements were completed in the third quarter, resulting in a lower-than-usual tax rate for the quarter. The company expected the settlements sometime in fiscal 2011, and thus they were included in guidance for an annual tax rate of approximately 37 percent.

Cash Flow
Net cash provided by operating activities was $627 million in the first three quarters of 2011, compared with $346 million in the first three quarters last year. This includes a funding contribution to the company's pension plan of $225 million in 2011 year to date, compared with approximately $325 million in the first three quarters of 2010.

Net cash used by investing activities in the first three quarters of 2011 was $472 million, compared with $285 million a year ago. Net cash used by financing activities in the first three quarters of 2011 was $522 million, including $451 million used to repay debt. This compares with net cash used by financing activities in the first three quarters of 2010 of $1.032 billion, including $1.090 billion used to repay debt.

In the third quarter, Macy's, Inc. resumed repurchasing shares of its common stock with excess cash. During the third quarter, the company repurchased approximately 8.2 million shares for a total of approximately $221 million.

Looking Ahead
The company continues to expect same-store sales in the fourth quarter of 2011 to be up 4 percent to 4.5 percent. This translates to same-store sales for the second half of 2011 to be up 4.0 percent to 4.3 percent, and full-year same-store sales to be up between 4.8 percent and 5.0 percent. This compares with guidance provided at the beginning of the year for 2011 same-store sales to be up by approximately 3 percent.

Macy's, Inc. is increasing its full-year 2011 earnings guidance to $2.70 to $2.75 per diluted share, including fourth quarter earnings guidance of $1.52 to $1.57 per diluted share. Previous 2011 full-year guidance (provided on August 10) was for earnings of $2.60 to $2.65 per share, and compares to initial guidance of $2.25 to $2.30 per diluted share provided at the beginning of the year.

Macy's management is scheduled to present at the Morgan Stanley Global Consumer Conference at approximately 8:40 a.m. on Wednesday, Nov. 16 in New York City.

Macy's Inc

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