Macy’s Inc reported a better-than-expected quarterly profit on Wednesday as the department store chain attracted more shoppers to its stores with heavy promotions, resulting in a smaller-than-feared decline in same-store sales..
The company’s shares rose 5% in premarket trading..
Comparable sales fell 0.7% in the third quarter ended October 31, compared with a 1.8% decline in the prior quarter and analysts’ consensus estimate of a 1.3% drop, according to IBES data from Refinitiv..
Macy’s said it had been able to drive traffic to its stores with markdowns and other promotions, but the discounts weighed on margins, causing gross margin to decline 110 basis points to 39.2%..
The company said it secured a $290 million loan from its banks, giving it financial flexibility as it navigates through a challenging holiday season. Macy’s had warned in September that it may need additional financing..
Net income attributable to Macy’s Inc rose to $73 million, or 47 cents per share, in the quarter from $34 million, or 22 cents per share, a year earlier..
Excluding one-time items, Macy’s earned 59 cents per share, beating analysts’ average estimate of 51 cents per share..
Total sales fell 3.9% to $5.18 billion, but topped analysts’ estimate of $5.15 billion..
Macy’s stuck to its full-year profit forecast of between $3.95 per share and $4.10 per share..
Earlier this month, larger rival Kohl’s Corp lowered its full-year profit forecast, blaming a rise in markdowns meant to clear excess inventory and soft demand for apparel and home goods..
Macy’s Chief Executive Officer Jeff Gennette said the holiday season was off to a good start and that recent initiatives aimed at improving customer experience were starting to pay off..
