Did Macy’s Fiscal 4Q15 Earnings Beat Analysts’ Estimates?



Macy’s fiscal 4Q15 earnings exceed expectations

Macy’s (M) earnings in fiscal 4Q15, which ended January 30, 2016, exceeded analysts’ expectations and the company’s own guidance due to improved sales in January. As discussed in part one of this series, Macy’s sales declined in 4Q15 due to weak holiday sales in November and December 2015. However, the company stated that its sales trend improved in January as the weather turned colder in the North, boosting winter shopping.

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Macy’s fiscal 4Q15 adjusted EPS (earnings per share) came in at $2.10, exceeding the consensus Wall Street estimate of $1.70, which excluded the impact of one-time items. The company also exceeded its own updated guidance issued in January 2016. Macy’s had expected 4Q15 diluted EPS to be in the range of $1.85–$1.90, excluding charges related to cost efficiencies and store closings.

Earnings down from last year

Macy’s adjusted EPS fell 14.2% in fiscal 4Q15 as compared to fiscal 4Q14. This marked the fourth consecutive decline in Macy’s earnings. Macy’s 4Q15 earnings fell due to lower sales and a decline in its margins due to higher markdowns. We discussed the company’s margins in part two of this series.

Overall, Macy’s adjusted EPS fell 14.3% to $3.80 in fiscal 2015 on a year-over-year basis.

Macy’s peers Nordstrom (JWN) and Dillard’s (DDS) saw their earnings fall 11.4% and 28.9%, respectively, in fiscal 4Q15. JCPenney (JCP) is scheduled to announce its fiscal 4Q15 results on February 26. The company’s turnaround efforts helped it bring down its adjusted loss per share in each of the first three quarters of fiscal 2015.

Macy’s and JCPenney together account for 2.5% of the SPDR S&P Retail ETF (XRT).

Macy’s update on real estate

Macy’s disclosed that with the help of its financial advisors it has started reaching out to potentially interested parties for partnerships or joint ventures involving some of its properties. The company is looking for potential real estate transactions for its mall-based stores and its four flagship stores.

In the fiscal 4Q15 conference call, Karen M. Hoguet, Macy’s chief financial officer, stated that the company expects to execute real estate transactions by the end of the year.

Macy’s sales have declined in each of the last four quarters. The company has been under pressure from activist investor Starboard Value to monetize its real estate. In the next part of this series, we’ll discuss Macy’s efforts to boost its sales.


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