Macy's reports strong Q4 results that exceed expectations
Macy's, Inc. reported improved fourth quarter results that exceeded expectations and represented a strong ending to the fiscal year. In addition, the company provided initial guidance that anticipates further improvement in sales and earnings in 2010.
"Our company initiated unprecedented change in 2009 as we adopted a unified organization structure and rolled out our My Macy's localization strategy amid the worst economic environment in decades. Despite these obstacles, we improved our profitability over the previous year through better-than-expected sales, improved gross margins and reduced expenses. We also continued to generate significant cash flow and ended the year with cash on hand of more than $1.6 billion after reducing debt by more than $950 million in 2010," said Terry J. Lundgren, chairman, president and chief executive officer of Macy's, Inc.
"The fourth quarter represented a clear-cut improvement in sales trends from earlier in the year, driven by success from My Macy's, a 26.6 percent increase in online sales and a significant rebound at Bloomingdale's. We outperformed most of our major competitors in the all-important holiday season. We believe this momentum will continue in 2010 as we challenge our very talented organization, which is energized and focused, to further improve sales and earnings. While we still see little meaningful near-term improvement in macro-economic conditions, we do believe there is opportunity to gain market share by increasing same-store sales," Lundgren said.
Earnings were $1.10 per diluted share for the 13-week fourth quarter of 2009, ended Jan. 30, 2010. These results include certain unusual items (described below) that negatively impacted fourth quarter earnings by $186 million or 30 cents per diluted share. Excluding these items, the company earned $1.40 per diluted share in the fourth quarter of 2009. This exceeds the company's most recent guidance for fourth quarter earnings per diluted share of $1.35 to $1.37, excluding restructuring-related costs. Original guidance for 2009 (provided Feb. 2, 2009) was for earnings per diluted share of 40 to 55 cents, excluding restructuring-related costs.
Unusual items in the fourth quarter of 2009 included $71 million ($48 million after tax or 11 cents per share) in costs and expenses associated with division consolidations and localization initiatives announced in February 2009, as well as with five store closings announced in January 2010, and $115 million ($79 million after tax or 19 cents per share) in asset impairment charges related to properties held and used.
Included in fourth quarter earnings is a non-cash credit resulting from the settlement of the company's federal income tax examinations for fiscal years 2006, 2007, and 2008. The credit, which is primarily attributable to the disposition of former subsidiaries, reduced income tax expense by $21 million and contributed 5 cents per diluted share to fourth quarter earnings. This amount was included in the company's most recent guidance for fiscal 2009.