Macy’s pleases shareholders with Q4 report: ‘what a terrific quarter’

Macy’s Inc (NYSE: M) shareholders are a happy lot this morning after the retailer announced solid results for its fiscal Q4 and raised the dividend by 5.0%. The stock is up just under 10% on Tuesday.

What the Q4 report tells us

• Net income came in at $742 million; an increase from last year’s $160 million.
• Macy’s earned $2.44 per share versus $1.60 per share in Q4 of fiscal 2020.
• Adjusted EPS printed at $2.45 a share, beating the FactSet consensus of $2.01 a share.
• Sales jumped 28% YoY and topped the analysts’ estimates, as per the earnings press release.
• Digital made up 39% of the total Q4 sales and was up 12% year-over-year.

Terry Lundgren reacts to the earnings report

Comparable sales climbed by 27.7%, well ahead of 25.1% that experts had anticipated. Commenting on the earnings report, former Macy’s president Terry Lundgren said on CNBC’s “Squawk Box”:

What a terrific quarter and a terrific year they had. Macy’s strong balance sheet has helped it over the last two years to invest and deal with challenges like supply constraints and expand its market share at the expense of tens of other retailers, who didn’t have a strong balance sheet.

Dividend and share repurchase

Fourth-quarter strength had Macy’s board authorise a new stock repurchase programme worth $2.0 billion on Tuesday. The Ohio-based firm lifted its dividend to 15.75 cents per quarter. Macy’s reiterated this morning that it has no plans of separating eCommerce from stores. Lundgren added:

Prior to the pandemic, online sales represented 12.5% of total purchases. It spiked up to 19.5% at the peak of the COVID crisis, and now is at 14.5%. It will go from here to 15.5% and it will keep on moving, but the physical stores will continue to represent the majority of purchases for quite some time to come. When consumers come into the store, their changes of success for size, fit, comfort, texture are significantly higher.

The report comes only days after Evercore ISI’s Omar Saad said he saw a 90% upside (at least) in Macy’s stock.