Macy's same-store sales top expectations, shares jump

Macy’s Inc on Tuesday reported higher-than-expected same-store sales growth for the fourth quarter and forecast a possible return to annual comparable sales growth in 2018, sending shares higher in pre-market trading.

The U.S. department store operator had introduced a new loyalty program to Macy’s credit card holders in October, and has worked to revamp marketing to make it more fashion forward, improve its mobile app and roll out new private-label items more quickly.

Macy’s reported adjusted earnings per share of $2.82 for the quarter, excluding restructuring charges and charges related to the U.S. tax overhaul signed into law in December, beating the average analyst estimate of $2.71 per share.

Revenue rose 1.8 percent to $8.67 billion, in line with the analyst estimate of $8.68 billion.

Sales at Macy’s stores open more than 12 months, including sales in departments licensed to third parties, rose 1.4 percent, well above the average analyst estimate of a 0.31 percent increase, according to Thomson Reuters I/B/E/S.

For fiscal 2018, the company said it expects comparable sales on both an owned and an owned-plus-licensed basis to be flat to up 1 percent.

That marked a possible turning point for the biggest U.S. department store chain. Macy’s has become emblematic of the so-called retail apocalypse, having closed more than 100 stores since 2015 and slashing thousands of jobs as mall foot traffic plummeted and customers defected to online and fast-fashion sellers.

Gross margin, which measures how much the company makes on each dollar of sales, slipped to 38.2 percent from 38.3 percent a year earlier.

The company had said that gross margins would fall 30 to 80 basis points in the quarter, largely because of free shipping under its new loyalty program that rewards high spenders.

Macy’s shares were up as much as 12 percent at $30.70 in premarket trading on Tuesday. Shares of rivals JC Penney Company Inc and Kohl’s Corp rose more than 3 percent premarket.