February 27, 2021

Macy’s and Polo Ralph Lauren Deliver Strong Quarterly Results

Macy’s, the midrange chain that also owns the fancier Bloomingdale’s, said Wednesday that it had its most successful second quarter in more than a decade, and that the company’s earnings and sales outlook for fall was even better than it had suggested earlier in the year.

Polo Ralph Lauren also had upbeat news on Wednesday. The company said it was increasing its full-year sales projections, telling analysts that it expected sales growth to be in the mid- to high teens, versus the midteens it had projected earlier.

“We have not yet seen any impact on our customers, both here in the United States or Europe,” the president and chief operating officer, Roger N. Farah, said.

Polo’s stock ended the day up 4.5 percent at $125.28, while Macy’s closed down 3.6 percent at $24.52. The Macy’s results suggested that shoppers were continuing to buy unnecessary items.

With the stock market’s gains for the year more than wiped out in recent trading, one might expect to see shoppers hunkering down for a double-dip recession by sticking to essentials like cotton socks or T-shirts.

Instead, Macy’s strongest-performing categories were jewelry, watches, accessories like handbags, cosmetics and fragrances, along with men’s clothes and home, said Karen M. Hoguet, chief financial officer of Macy’s, in a call with investors.

She also noted that with stylish items, customers were not particularly price-sensitive, and that Macy’s had been selling more items at their original prices, rather than having to mark them down.

Macy’s profit in the second quarter rose 64 percent to $241 million, or $0.55 a share, above analyst expectations of $0.50 a share. Its sales rose 7.3 percent to $5.94 billion.

“Our outlook for the remainder of the year reflects the optimism we feel about the direction of the business, as well as realism about the macroeconomic environment,” Ms. Hoguet said.

The “biggest surprise” in the Macy’s results was its improved projections for the full year, said a Citi analyst, Deborah Weinswig, in a note to clients. Macy’s had begun the year saying full-year earnings should be $2.25 to $2.30 a share, then raised that to $2.40 to $2.45 a share. On Wednesday, it said the year should end up even better, increasing projections to $2.60 to $2.65 a share.

It expects its full-year comparable-sales figures, or revenue at stores open at least a year, to increase between 4.8 and 5.1 percent, it said Wednesday, which is even higher than the 4.8 percent it had projected in July. And despite the stock market swings this month, August should be Macy’s strongest month in the quarter, Ms. Hoguet said.

Because luxury shoppers often buy or hold back based on what the stock market is doing, analysts were particularly interested in Macy’s Bloomingdale’s division, which sells $253 jeans and $2,650 Gucci watches.

Asked if she had seen any slowdown at Bloomingdale’s as the stock market has fallen, Ms. Hoguet replied that “A, we have not, but B, I think it’s a little bit early to be judging.” The Bloomingdale’s business was “very strong,” she said.

Robert Drbul, an analyst with Barclay’s Capital, said he was encouraged by that assessment. “Right now we’re all sort of holding our breath waiting to see if there is a reaction, but it appears to date that you really haven’t seen anything,” he said.

Polo Ralph Lauren reflected similar trends. Full-price selling “worked so extraordinarily well” in the quarter, Mr. Farah said.

Profit rose 52 percent from the same quarter a year earlier, to $184.1 million, or $1.90 a share. Analysts tracked by Bloomberg had expected earnings of $1.47 a share. Revenue rose 32 percent, to $1.53 billion.

A fuller picture of the stock market’s effect on retailing may emerge soon, with Nordstrom and Kohl’s reporting on Thursday, J.C. Penney and Dillard’s on Friday, and Saks Fifth Avenue and Wal-Mart on Tuesday.

Article source: http://feeds.nytimes.com/click.phdo?i=5eafcaaeeb6af4ccddc71e5fb870cfed

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