Macy's Inc. on Wednesday reported a strong third quarter performance… (Frank Franklin II, Associated…)
Department store giant Macy's Inc. reported strong profits and sales during a robust third quarter and raised its outlook for the year with upbeat expectations for the crucial holiday season.
The retailer, parent to the Macy's and Bloomingdale's chains, on Wednesday reported profit of $139 million, or 32 cents a share, compared with $10 million, or 2 cents a share, in the same quarter a year ago.
The department store giant attributed the upswing to strong sales at its upscale Bloomingdale's stores, new online and mobile initiatives and continued success in tailoring products to local markets, a strategy rolled out in 2009 as the retailer struggled during the economic downturn.
For the three months ended Oct. 29, sales increased $5.85 billion, a 4.1% bump from sales of $5.62 billion in the third quarter of 2010. Same-store sales, or stores open at least a year, was up 4%. Online sales spiked 39.8%.
Looking forward to the rest of the year, Chief Executive Terry J. Lundgren predicted the momentum to continue as people begin their holiday shopping in earnest. "Our stores look great. Our online sites, as well as our mobile-enhanced websites and apps, provide a robust complement to the active lifestyles of shoppers. The quality and creativity of our marketing support for the holiday is the strongest ever," he said in a statement.
However, the retailer said gross profit margins were squeezed by rising cotton prices, which increased the cost of some clothing and home goods. Free shipping offers for its rapidly growing online sector also hurt margins.
Separately Wednesday, the company announced plans for three new Macy's stores, including a 103,000-square-foot location to open in 2013 in Victorville at the Mall of Victor Valley.
The retailer forecasted sales in the fourth quarter to rise 4% to 4.5%. The company also raised its full-year guidance to a range of $2.70 to $2.75 per share, up 10 cents from previous guidance of a range of $2.60 to $2.65. Shares of Macy's fell $1.71, or 5.3%, to $30.45 on Wednesday.