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Home misses mark in Q1 at Macy’s but back on road to recovery

Cincinnati – Poor weather conditions did their worst to dampen Macy’s and Bloomingdale’s sales performances in the first quarter, hurting the home segment the most with lagging sales throughout the department.

But these trends are already shifting since late April, and home is starting to uptick, thanks in part to better weather and warmer climates around the country.

As Karen Hoguet, cfo, said during the company’s earnings call this morning: “Our toughest area was home, with weakness across the board, including big ticket. This was in part due to year-rounding and [the slow housing market]…and much of the weakness, like outdoor furniture, was because of the weather. But we’ve started seeing all that improve since late April.”

Later in the call, in response to an analyst’s question about competition in home, Hoguet explained the company expects the recent softness in the category was only temporary.

“Home stood out [in Q1] because home has been so strong for so long. But there is nothing we are seeing on the competitive front to lead us to be concerned about home long term.”

Turning to total company performance, net income was a bright spot with a 3.23% increase to $224 million from $217 million a year ago, and earnings up 9% to 60 cents per diluted share from 55 cents per diluted share in the first quarter of 2013.

However, sales dipped 1.7% to $6.279 billion from $6.387 billion in the same period last year, and comps were down 1.6%. Together with sales from departments licensed to third parties, first quarter 2014 sales on a comparable basis were down 0.8%.

“We were up against a strong comparable period a year ago,” Hoguet said. “We were expecting sales to be stronger than they were at both Macy’s and Bloomingdale’s….and the weather clearly played a major role in the weakness.”

Not surprisingly, the South “did far better in terms of sales,” she continued, than the North region, where weather was harsher and colder. By line of business, the best performers in Q1 included handbags, impulse apparel for Millennial customers, active, kids, and intimate apparel. Additionally, segments that continued their momentum included juniors for younger Millennial shoppers – “which is very important for us.”

Looking ahead, the company continues to expect comparable sales growth in fiscal 2014 in the range of 2.5% to 3%, and it reiterated its guidance for earnings per diluted share in fiscal 2014 of $4.40 to $4.50.

The company also announced a 25% increase in its dividend on common stock and a $1.5 billion increase in its share repurchase authorization.

 

 

 

 

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