Macy’s Earnings Look Good Because Expectations Are Lower

In its outlook statement, Macy’s reiterated second-quarter guidance, calling for same-store sales growth in the range of 2.5% to 4% in the second half of the year and a full-year rise of 2% to 2.9%. At the end of the first quarter, the retailer forecast a same-store sales increase of 3.5% for the 2013 fiscal year.

Macy’s lowered its outlook for 2013 EPS at the end of the second quarter from a range of $3.90 to $3.95 to a new range of $3.80 to $3.90. The company reaffirmed the new range in this announcement. The current consensus full-year estimates called for EPS of $3.78 on revenues of $27.94 billion. Those estimates have dropped from prior levels calling for EPS of $3.94 on revenues of $28.33 billion at the end of the second quarter.

The company’s CEO said:

We were able to achieve a very successful third quarter of 2013, despite the tepid economic climate. … [B]usiness in the third quarter benefitted from intensified marketing strategies to emphasize the outstanding value in our merchandise deliveries. Both Macy’s and Bloomingdale’s performed well in the quarter, and we saw improvement in the sales trend in every region of the country compared with the spring season.

Same-store sales rose 3.5% in the quarter, compared with the third quarter of 2012, and total sales rose 4.6%.

Macy’s shares will get a nice jolt, but the only reason is that the bar is a lot lower than it was at the beginning of the year.

Shares were up more than 6% in premarket trading Wednesday, at $49.20 in a 52-week range of $36.30 to $50.77. Thomson Reuters had a consensus analyst price target of around $51.40 before these results were announced.