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Macy's net income jumps by double-digits

Company ups guidance

Cincinnati - Three's a charm for Macy's, as the company's third consecutive strong spring selling season resulted in a 16% second quarter profit bump.

Net income for the period, ended July 28, was $279 million, or 67 cents per share, a 22% increase in EPS.

Sales for the quarter rose 3.0% to $6.1 billion and comps were up 3.0%.

Year to date, net income soared by 24% to $460 million and earnings per share jumped 27% to $1.09.

First-half sales totaled $12.26 billion, up 3.7%, with comps also rising 3.7%.

Online sales - for and combined - climbed 36.1% in the second quarter and 34.8% in the first half of 2012.
Online sales positively affected total same-store sales by 1.7 percentage points in the quarter and 1.6 percentage points in the year to date. Online sales are included in the same-store sales calculation for Macy's Inc.

Macy's is aligning its online business more closely with physical stores. By the end of August, cfo Karen Hoguet said today in the company's conference call, 290 Macy's stores will be fulfilling online orders versus distribution centers.

While the process is still being fine-tuned, "what we've learned in many situations is that our inventory was often too tight in dot-com [at the distribution centers] to satisfy more demand."

She added that Macy's online order fulfillments "coming out of the stores is getting very close in accuracy to the distribution centers. In total, we are doing a spectacular job in fulfilling orders out of the stores, frankly quite better than I thought we could do."

To support fourth-quarter selling, Macy's will take a break in the multi-year Herald Square remodeling project over the holidays "so that customer shopping patterns are uninterrupted during the holiday season." All of the first- and second-floor selling space at Herald Square is expected to be fully reopened over the next 90 days.

The department store chain today raised its earnings guidance for full fiscal year to a range of $3.30 to $3.35 per share, compared with previous guidance for EPS of $3.25 to $3.30. Guidance for same-store sales in fiscal 2012 remains unchanged at an increase of approximately 3.7%.

In the second half of 2012, the 840-unit chain plans to open three new Bloomingdale's Outlet stores and will close one Macy's store in Santa Ana, Calif.


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