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Macy's Q4 Net Income Slips, But It Continues To Beat Street

Tuesday February 26th, 2013 - 1:00PM


For the 53 weeks of fiscal 2012, Macy's, Inc. posted net income of $1.34 billion, or diluted earnings per share of $3.24, versus net income of $1.26 billion, or earnings per diluted share of $2.92, in the 52-week period immediately before. On a comparable store basis that encompasses 52 weeks in both fiscal years, Macy's, Inc.'s 2012 sales were up 3.7%.

Macy’s total sales for the 53 weeks of fiscal 2012 totaled $27.69 billion, up 4.9% from the 52 weeks of fiscal 2011.

Adjusted, earnings per diluted share were $3.46 for fiscal 2012, excluding pre-tax expenses of $137 million, which translates to $87 million after tax, or 21 cents per share, associated with the early retirement of outstanding debt, and $5 million in pre-tax expenses, which translates to $3 million after tax, or one cent per share, related primarily to store closings, Macy’s noted.

Adjusted fiscal 2011 earnings per diluted share were $2.88, excluding pre-tax gains of approximately $54 million, which translates to $34 million after tax, or eight cents per share, from the sale of store leases related to the 2006 divestiture of Lord & Taylor, and $29 million in pre-tax expenses, which translates to $18 million after tax, or 4 cents per share, related primarily to store closings, the retailer pointed out.

For the 14-week fourth quarter of 2012, net income was $730 million while earnings per diluted share were $1.83 versus. That compared with net income of $745, or $1.74 per diluted share, in the year-prior period. On a comp store basis that incorporates 13-week periods in both years, Macy's, Inc.'s fourth quarter sales were up 3.9%, the retailer said.

Total sales in Macy’s 14-week 2012 fourth quarter totaled $9.35 billion, an increase of 7.2% versus the period last year.

Adjusted fourth quarter diluted earnings per share were $2.05 excluding pre-tax expenses of $133 million, which translate to $85 million after tax, or 21 cents per share, associated with the early retirement of approximately $700 million of outstanding debt, and $5 million in pre-tax expenses, which translates into $3 million after tax, or one cent per share, related primarily to the store closings announced on January 3, Macy’s stated.

Macy’s earnings beat a Thomson Reuters analyst consensus estimate for the full year, by five cents, and the quarter, by six cents.

Online sales at macys.com and bloomingdales.com combined advanced 47.7% in the fourth quarter and 41% for fiscal 2012 versus the same timeframes in 2011. Online sales boosted company comps by 3.3 percentage points in the fourth quarter and 2.2 percentage points in fiscal 2012 as a whole, Macy’s related. Online sales are included in comp calculations for Macy's, Inc.

"2012 was another great year in our company's evolving story of growth," said Macy’s chairman, president and CEO Terry Lundgren. “The numbers reflect our success in pursuing the right strategies, and executing them with conviction in every part of the business with a talented team we consider to be the best in retailing. We again added more than $1 billion in top-line sales growth in 2012. Comp sales rose by 3.7% for the year, on top of increases of 5.3% in 2011 and 4.6% in 2010. Earnings per share grew by double-digits for the fourth consecutive year. Operating cash flow continued to be strong, and we used excess cash to repurchase shares and double the dividend. The best news of all is that we continue to see significant upside opportunity ahead in those strategies that have worked so well since we reorganized the company in 2009. Going into 2013, our team is moving ahead with new plans and actions to sharpen our approach to localized merchandise assortments and marketing, which we continue to believe is Macy's sustainable competitive advantage. We are accelerating progress in omnichannel strategies at Macy's and Bloomingdale's to bring together our efforts in stores, online and mobile in a manner that satisfies emerging shopping patterns and capitalizes on the strength of our inventory regardless of where the customer demand occurs. And we are engaging shoppers in a manner that engenders loyalty and builds our business with each individual customer."

Lundgren added, "Central to our continued success at both Macy's and Bloomingdale's is our expertise in offering our customers fresh and exclusive fashion merchandise, and to deliver outstanding value. You can and will see this in every family of business, and particularly in our new strategies which will begin rolling out in 2013 for Millennial customers, now America's largest generation."