Macy’s Plans Topline Boost As Q4 Earnings Surpass Expectations

For the fourth quarter ended January 31, Macy’s, Inc. posted net income of $793 million, or $2.26 per diluted share, compared to $811 million, or $2.16 per diluted share, for the year-earlier period. Comparable store sales advanced 2.5% in the quarter year over year.

Adjusted earnings per share were $2.44. Adjusted earnings exclude charges of $87 million, totalling $54 million after tax or 15 cents per diluted share, associated with previously announced merchandising and marketing restructuring, store and field adjustments, store closings and asset impairments, as well as $17 million, totalling $10 million after tax or three cents per diluted share, of interest expense related to a make-whole premium for the early retirement of debt.

Adjusted earnings per share beat a Zacks consensus financial analyst estimate of $2.42.

Fourth quarter operating income was $1.36 billion versus $1.35 billion for the fiscal 2013 period, with adjusted operating income coming in at $1.45 billion compared with $1.44 billion for the frame in the previous year. Comps gained 1.4%.

Net sales were $9.36 billion versus $9.2 billion in the quarter a year prior, which missed a Zacks average analyst estimate of $9.39 billion.

For the full fiscal year, Macy’s posted net income of $1.53 billion, or $4.22 per diluted share, versus $1.49 billion, or $3.86 per diluted share, for the year earlier. Adjusted earnings per share, excluding one-time items, were $4.40.

Operating income was $2.8 billion in the 2014 fiscal year versus $2.68 billion in 2013, while adjusting operating income was $2.89 billion versus $2.77 billion in the year earlier.

Net sales were $28.11 billion versus $27.93 billion in the year prior.

Terry Lundgren, Macy’s chairman and CEO, said in introducing the financial results, “Macy’s, Inc. reached a milestone in 2014 by achieving a 14% adjusted EBITDA rate, which positions us among best-in-class retailers. Having now reached such a healthy profitability rate, we are shifting our resources and energies to growing the topline faster while maintaining this high profitability rate level. As described in various announcements made over the past 45 days, we have now fully aligned our management team to fuel organic growth within our existing omnichannel business as customer shopping patterns evolve at both Macy’s and Bloomingdale’s. Concurrently, we have established an entirely new part of our organization to lead innovation and new growth initiatives, including offprice, international and new store formats.”

Lundgren noted that the company expected, “some of these new activities to enter start-up phases later in 2015, and we remain committed to succeeding in a test-and-learn environment where the best and most promising ideas can be ramped up quickly. We are very excited about our upcoming acquisition of Bluemercury, Inc., widely recognized as America’s largest and fastest-growing luxury beauty products and spa retailer. We continue to expect to complete the Bluemercury transaction in the first quarter, with an initial focus on accelerating the growth of its base of self-standing specialty stores in urban and suburban markets, as well as on accelerated omnichannel growth and offering Bluemercury products in Macy’s stores. This represents a new channel and access to new customers for our company.”

In fiscal 2014, the company opened five stores and closed 22.