Macy's rises 5% after posting higher profits but disappointing sales
The department store chain's third quarter net income rose 23% to $217 million.
Macy's (M) spread some mixed holiday cheer on Wednesday, with higher third-quarter earnings but disappointing sales.
The department store chain's quarterly net income rose 23% to $217 million, up from $177 million for the same quarter last year. Its diluted earnings per share rose to 61 cents, up 14 cents from last year's third quarter.
The average estimate of analysts surveyed by Zacks Investment Research was for earnings of 49 cents per share.
Third-quarter sales for the company, which also operates Bloomingdale's, were $6.2 billion, down about 1.3% from the third quarter of 2013.
Investors applauded the results. Shares jumped 5% to %61.57 in heavy trading.
"We are very pleased with our third-quarter earnings, even though the sales performance fell short of our expectations," Macy's CEO Terry Lundgren said in a statement. He said the company is optimistic for the fourth quarter based on several factors including its merchandise and marketing strategies.
The company has revised its 2014 guidance. Earnings per diluted share for the full-year 2014 now are expected in the range of $4.25 to $4.35, compared with previous guidance in the range of $4.40 to $4.50, the company said in a statement.
Paul Swinand, an equity analyst for Morningstar, said he feared Macy's sales would be "worse because a number of retailers such as Kohl's have reported soft comparable store sales. Department stores are a competitive business, and it seems like it's always going to be competitive business."
Macy's previously announced it will open stores at 6 p.m. on Thanksgiving, two hours earlier than last year. It expects same-store sales in the fourth quarter to increase between 2% and 3%, Chief Financial Officer Karen Hoguet said in a call with analysts.
She said that while the company is optimistic about the holiday season, it recognizes that consumers are spending more of their discretionary income on products Macy's doesn't sell, including cars, electronics, and home improvement. Although Macy's is hopeful that its buy online, pick up in store feature will help drive last minute purchases.
The company operates the Macy's and Bloomingdale's brands with about 840 stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy's and Bloomingdale's, plus macys.com and bloomingdales.com websites, and 13 Bloomingdale's outlet stores.
Contributing: The Associated Press