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Macy's May Be Best Retail Store Stock

By    |   Thursday, 22 Dec 2011 03:01 PM

Macy's (M) has put together a strong run of revenue and profit growth since the 2008-2009 economic recession. At the present time, the company may be the best in class for investors looking at department store stocks.

Macy's is comprised of the Macy's and Bloomingdale's chains of department stores and the affiliated online retail web sites. The Macy's chain includes more than 800 stores in 45 states. Bloomingdale's has approximately 40 department stores in 12 states plus six Bloomingdale's Outlet stores. Macy's corporate issues monthly sales reports breaking out sales, same-store results, and online sales growth.

For the first three quarters of fiscal 2011, which closed on Oct. 29, Macy's reported total revenues of $17.7 billion, up from $16.7 billion in the same period a year earlier. Gross profit margins remained level at 40 percent. Net income for the three quarters was $1.18 per share, up 180 percent from 42 cents in 2010.

The increased profit margin was primarily due to a 2.2 percent decline in SG&A expenses as a percentage of revenue. For the full year 2011, the company is forecast to earn $2.78 per share compared to $2.09 in 2010. The consensus earnings estimate for 2012 is $3.19 per share.

Strong holiday

Macy's, like many retail companies, earns a large portion of total annual profits in the holiday-focused fourth quarter. The earnings estimate for the 2011 fourth quarter is $1.62 per share, or 58 percent of the total profits for the year.

Through the first 11 months of 2011, Macy's has been consistent, with about 5 percent year-over-year same-store sales growth. However, the fourth quarter earnings estimate is only 3 percent above the year earlier result, setting up for a positive earnings surprise when the fourth quarter results are announced.

The company includes the results from Macys.com and Bloomingdales.com in the same-store growth figures. Through the first 11 months of 2011, online sales were 40 percent greater than in 2010.

Recently, analyst Michelle Clark of Morgan Stanley noted Macy's strong sales growth in the face of a slow economy and attributed the results to an “invigorated and smart management team" implementing new marketing strategies and streamlining operations.

The company reports next on Feb. 21.

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Macy's (M) has put together a strong run of revenue and profit growth since the 2008-2009 economic recession. At the present time, the company may be the best in class for investors looking at department store stocks. Macy's is comprised of the Macy's and Bloomingdale's...
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2011-01-22
Thursday, 22 Dec 2011 03:01 PM
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