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Macy’s Dresses to Impress with Q1 2018 Results, Upgraded Guidance

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Part 2
Macy’s Dresses to Impress with Q1 2018 Results, Upgraded Guidance PART 2 OF 4

Strategic Efforts Help Macy’s Sales Rise in Q1 2018

Improved sales numbers

Macy’s (M) generated sales of $5.5 billion in the fiscal first quarter, beating analysts’ expectations of $5.4 billion. Macy’s sales grew 3.6% on a year-over-year basis in the fiscal first quarter. 

Macy’s sales grew for the second straight quarter after 11 disappointing quarters of lower sales. The company’s sales growth in the fiscal first quarter was an improvement compared to the 1.8% sales growth in the fiscal fourth quarter of 2017.

Strategic Efforts Help Macy’s Sales Rise in Q1 2018

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Key growth drivers

Macy’s same-store sales grew 4.2% on an owned-plus-licensed basis. The shift in the company’s Friends and Family event to the fiscal first quarter from the fiscal second quarter had a favorable impact of 250 basis points on its same-store sales growth.

The company’s sales also gained from strong consumer spending and significant improvement in international tourism spending. The company’s international tourist sales grew ~10.0% in the fiscal first quarter. In the company’s conference call, Macy’s CFO, Karen M. Hoguet, stated that this was the second instance since 2014 that the company experienced a rise in its international tourist sales.

The company’s efforts to enhance its merchandise offerings and its new loyalty program also helped boost its top-line growth. The company’s online sales experienced double-digit growth in the quarter.

Sales outlook

Macy’s (M) expects total sales growth ranging from -1.0% to 0.5% in fiscal 2018. Its expects its same-store sales to rise 1.0%–2.0% on an owned-plus-licensed basis. Macy’s previous outlook was for same-store sales growth of 0.0%–1.0% and a decline in total sales of 0.5%–2.0%. Improved consumer spending and the impact of the company’s strategic initiatives are expected to drive its top-line growth.

We’ll discuss Macy’s margins in the next part of this series.

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