Macy’s ups share buyback programme despite poor sales

Harriet Green
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Macy’s, the enduringly popular US fashion store, has reported a 1.7 per cent drop in sales in the first quarter, from a year earlier - from $6.38bn (£3.8bn) to $6.27bn (£3.7bn).

Analysts had been expecting a fall of 1.3 per cent.

It’s still upping its share buyback programme, though - by $1.5bn. It also increased its quarterly dividend from 25 cents to 31.25 cents per share.

And despite the soft sales, profits rose to 60 cents a share - a whisker above the 59 cents expected and up from 55 cents a year earlier.

Peter Garnry of Saxobank explains that, despite Macy’s being, for many years, the “bright spot” among US retailers, they now remain neutral on its stock, relative to the market.

Over the past three months, consensus estimate has slid from 63 cents per share. Fourth quarter same-store sales disappointed and, as expected, the severe winter weather seen in the US hit sales.

Manangement outlook, which Garnry says will prove key over the year, is upbeat. Chief executive Terry Lundgren commented:

We continue to have a positive outlook for 2014 and are reaffirming the full-year guidance we provided in January. The fundamentals of our business and our ongoing strategies remain strong.

Although most analysts (71 per cent) rate Macy’s as a buy, Garnry says: “We believe there are better opportunities among US equities”.

Lundgren stressed that business will continue to improve in the second quarter, now the horrific weather's over.

Shares in Macy’s are up eight per cent this year, outperforming the S&P 500 and its retailing index.

Following the release of the results today, they gained 1.8 per cent in pre-market trading.