Macy’s (M) Q2 2021 revenue

Shoppers visit Macy’s flagship store in New York on May 20, 2021.

Eduardo Munoz | Reuters

Macy’s reported second quarter earnings and sales on Thursday that beat analysts’ estimates as customers returned to its stores to purchase jeans, luggage and new clothes.

The department store chain has also raised its outlook for 2021 and is entering the second half of the year. Despite the ongoing uncertainty caused by the Covid pandemic, Macy’s said its turnaround strategy is working and attracting new buyers.

Macy’s shares rose more than 5% in pre-trading on the news.

CEO Jeff Gennette said in a press release that the first quarter momentum continued into the second quarter as the retailer attracted more younger customers to shop in its stores. The company said it had 5 million new customers in the quarter, 41% of whom were digital.

Here’s how the company performed in the second quarter of fiscal year compared to Wall Street’s expectations according to an analyst survey by Refinitiv:

  • Earnings per share: $ 1.29 adjusted vs. 19 cents expected
  • Revenue: $ 5.65 billion versus an expected $ 5.01 billion

Macy’s net income for the July 31st period increased to $ 345 million, or $ 1.08 per share, compared to a net loss of $ 431 million, or $ 1.39 per share, last year. With no one-time adjustments, Macy’s made $ 1.29 per share for the quarter. Analysts were looking for 19 cents per share.

Net sales increased from $ 3.56 billion a year ago to $ 5.65 billion. That surpassed the estimate of $ 5.01 billion.

Macy’s said like-for-like sales on a proprietary plus licensed basis grew 62.2% year over year, while analysts surveyed by Refinitiv expected growth of 41.1%.

Ecommerce sales were down 6% year over year when Macy’s stores were closed for a period of time due to the pandemic and shoppers resorted to online purchases. They increased by 45% on a two-year basis. Digital sales accounted for 32% of net sales.

Macy’s has raised its fiscal 2021 net sales guidance to $ 23.55 billion to $ 23.95 billion from an earlier range of $ 21.73 billion to $ 22.23 billion.

For the full year, adjusted earnings are expected to range from $ 3.41 to $ 3.75 per share, compared to the previous guidance of $ 1.71 to $ 2.12 per share.

Analysts polled by Refinitiv had expected adjusted earnings per share of $ 2.33 on sales of $ 22.15 billion.

Rival Kohl similarly raised its full-year outlook on Thursday and expects a strong back-to-school shopping season. Walmart and Target reported better-than-expected quarterly sales earlier in the week as Americans spend their paychecks on new clothes, backpacks, and beauty items.

The contagious delta variant has not yet had much of an impact on retailers’ results. Companies are closely monitoring the spread of the variant, and many have reintroduced mask requirements. However, the impact may vary from business to business as the rise in Covid is worse in populations with lower vaccination rates.

Macy’s also announced a partnership with the owner of Toys R Us on Thursday, which will open more than 400 shop-in-shops with the toy brand from next year. The company is already offering a range of toys online before Christmas.

The department store chain also said it was reinstating its dividend and its board of directors approved a $ 500 million share buyback program.

At the close of trading on Wednesday, Macy’s shares were up more than 60% year-to-date, for a market value of $ 5.64 billion.

The full press release on Macy’s results can be found here.

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