The third quarter earnings for Macy’s, a department store chain in the US, were recently announced last Thursday. Macy’s said that its earnings from July-September reached $0.17 per share on revenue of $5.63 billion. Although there was progress observed, the reports still came short compared to Wall Street analysts’ prediction that the department store will earn $0.41 per share on revenue of $5.65 billion for the quarter.
The company’s sales generated net sales of $5,626 million that experienced a sharp decline of 4.2% compared to the previous year’s quarter report. Macy’s owned plus licensed basis sales were down to 2.7%, while comparable store sales fell to 3.3%.
Aiding the sales increase for the department store were demands under Apple products, especially its smart watches, and watches from Michael Kors, though the sales in the cosmetics department was experiencing continuous declines.
On Zacks Consensus Estimate for fiscal 2016, Macy’s has missed the 16.3 average based on the company’s performance in the trailing four quarters. The department store’s net income fell to $170 million, or 5 cents per share, during its third quarter which ended last October 29. A decline can be observed compared to its $118 million or 36 cents per share the previous year. Its net sales dropped as well, from $5.87 billion to $5.63 billion.
In order to achieve more profitable growth, Macy’s said that they would close 100 of their stores. Reports also publish that the management sold five of their stores to General Growth Properties.
CFO Karen Hoguet said, “Cosmetics was one of the weaker businesses in the third quarter.” “And we are focused on how to improve that in the fourth quarter, though the fragrance business has been strong,” Hoguet added.
Although the company’s Q3 reports proved to be quite disappointing both for the company and to several analysts, Macy’s stocks has risen to as much as 6.6% to $40.90 in New York, followed with more than 9% to nearly $42 during the morning trading right after the announcement that its same-store sales fell.
Amidst the company’s Q3 reports, Macy’s has announced that they made an agreement with Brookfield Asset Management, an alternative asset manager. This gave Brookfield the exclusive right to create a pre-development plan for each of Macy’s growing real estate assets, a total of 50, for up to 24 months. The deal was meant to further highlight Macy’s development potential.
According to several reports, Macy’s has signed other contracts as well. The first was to sell its 248,000-square-foot union Square Men’s building in San Francisco for $250 million. The deal was expected to be closed by January 2017 and the company is expecting to gain around $235 million by January 2018. Another contract signed was to sell its Portland, Ore. store for $54 million.
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