Q1 results

Macy’s (M) sales of $5.50 billion for the first quarter of fiscal 2019, which ended on May 4, fell marginally behind analysts’ estimate of $5.51 billion. However, the department store chain’s adjusted EPS of $0.44 crushed analysts’ forecast of $0.33. Macy’s stock was down 1.1% as of 1:44 PM ET today.

On a year-over-year basis, Macy’s sales fell 0.7% in the first quarter while adjusted EPS were down 8.3%. Macy’s bottom line was dragged down by lower sales and higher expenses.

Macy’s same-store sales grew 0.7% on an owned-plus-licensed basis, marking the sixth straight quarter of same-store sales growth. Macy’s sales benefitted from its Growth50 strategy and off-price Backstage business. Also, Macy’s digital sales grew by double digits in the first quarter, with mobile remaining the company’s fastest-growing channel.

Macy’s Beats Q1 Earnings Expectations, Maintains Outlook

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Strategic initiatives

After achieving positive results from its Growth50 strategy, which tested several initiatives in 50 select stores, Macy’s is expanding the concept to 100 additional stores. Macy’s mobile apps delivered over $1 billion in sales in fiscal 2018. The company continues to invest in enhancing its mobile apps.

Macy’s opened nine off-price Backstage stores-within-stores in the first quarter of fiscal 2019, ending the quarter with 174 Backstage stores within Macy’s locations and seven freestanding Backstage stores.

Guidance intact

Macy’s retained its guidance for full-year fiscal 2019. The company continues to expect its fiscal 2019 same-store sales growth in the range of 0.0%–1.0% on an owned and owned-plus-licensed basis. It expects net sales essentially unchanged in fiscal 2019 compared to the previous fiscal year.

Macy’s expects its fiscal 2019 EPS in the range of $3.05–$3.25. This EPS guidance doesn’t take into account settlement charges associated with the company’s defined benefit plan and the impact of impairment and other costs.

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