(Reuters) - Macy’s Inc’s (M.N) sales this year were weak until Valentine’s Day, the department store operator said on Tuesday, but it stuck to its full-year forecast because it expects business to return to normal when the weather improves.
Shares of Macy’s were up 3.1 percent at $54.81 in morning trading after the company reported a higher-than-expected profit for the holiday quarter.
Macy‘s, which also owns the high-end Bloomingdale’s chain, blamed a decline in January sales in part on the snowy and cold weather in much of the United States that forced 244 of its stores to close temporarily during the month.
Chief Executive Officer Terry Lundgren said in a press lease that he expected customers to return to their usual shopping patterns once the weather gets warmer and spring merchandise arrives in stores.
While February is a small month for retailers in terms of sales, Valentine’s Day is an occasion for jewelry and apparel shopping and can be a gauge of consumers’ willingness to spend on nonessentials.
Macy’s reiterated its forecast for a profit of $4.40 to $4.50 per share and comparable sales growth of 2.5 percent to 3 percent in the fiscal year that started this month.
The company said comparable sales, including e-commerce and sales at stores open at least a year, rose a less-than-expected 1.4 percent in the fourth quarter ended February 1 as the drop in January dragged down what had been a strong holiday period.
Net income rose to $811 million, or $2.16 a share, from $730 million, or $1.83 per share, a year earlier. Excluding items such as charges for store closings, earnings were $2.31 a share, 14 cents more than Wall Street expected, according to Thomson Reuters I/B/E/S.
Unlike many of its peers, Macy’s managed to preserve its gross margin during a competitive holiday season, when many retailers gave deeper-than-expected discounts.
Macy’s gross profit margin remained at 40.6 percent of sales. On Monday, Dillard’s Inc (DDS.N) said its margin had fallen 1.8 percentage points to 32.8 percent of sales.
The company, which has been investing heavily to beef up its e-commerce capabilities and remodeling many stores, including its Manhattan flagship, said it would spend about $1 billion on capital projects this year.
Stifel Nicolaus analyst Richard Jaffe said Macy’s was “in a better position than most to gain market share.”
Reporting by Phil Wahba in New York; Editing by Jilian Mincer and Lisa Von Ahn