Macy’s rings up profit of $23 million

Department store giant Macy’s Inc. said Wednesday that it swung to a better-than-expected profit in its first quarter thanks to strong sales in stores and online, better inventory control and an overhaul of its merchandise strategy.

For the three months ended May 1, the Cincinnati chain reported profit of $23 million, or 5 cents a share, compared with a loss of $88 million, or 16 cents, in the year-earlier period.

In the rapidly growing online sector, sales at Macys.com and Bloomingdales.com were up 34%.

Department stores have struggled in recent years as consumers shift their shopping habits to standalone stores, specialty retailers and online sellers.

To stay competitive, Macy’s has boosted its Web presence and last year announced the widespread rollout of My Macy’s, an initiative to localize merchandising to specific stores. The strategy has allowed the chain to better respond to customer preferences and needs by grouping stores into small districts of about 10 to 12 locations each.

On Wednesday, Chief Executive Terry Lundgren said the company was pleased with the continued success of My Macy’s and would continue to expand both the Macy’s and Bloomingdale’s brands.

“While the direction of the overall economy remains unclear, we believe we are well-positioned to continue to gain market share,” he said in a statement. “With major changes now behind us, the Macy’s organization has settled in and is hitting its stride.”

First-quarter sales totaled $5.574 billion, an increase of 7.2% compared with sales of $5.199 billion in the same period last year. At stores open at least a year, called same-store sales and considered an important measure of a retailer’s health because it excludes the effect of store openings and closings, sales were up 5.5%.

Shares of Macy’s rose 80 cents, or 3.3%, to $24.70.

Last month, the chain increased its full-year outlook, saying it expected same-store sales to grow in the range of 3% to 3.5% and profit to be from $1.75 to $1.80 a share.

With Macy’s reporting its earnings before other department stores this week, it’s difficult to discern how well the company performed relative to the rest of the sector, said Bill Dreher, senior retail analyst at Deutsche Bank Securities.

“When we get the competing department stores’ results over the next 48 hours, we’ll be able to isolate better how much of the improvement in Macy’s results is specific to the company and how much of it is just a better consumer spending environment,” he said.

“So the jury is still out, but the early indications are what Macy’s is doing is really beginning to work.”

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