Retailer Macy's (M 30.85, +3.13, +12.4%) is making a big move today after the company reported its fiscal fourth quarter results and issued its fiscal 2018 outlook. Both were better than expected, implying today's outsized gain isn't just a case of short-covering activity.
Investors appear to be warming up again to Macy's, sensing that its stock has accounted for the worst of the problems presented to the company by increased online competition and shifting consumer buying preferences.
The fourth quarter results have validated the assertion, as Macy's sales increased 1.8% to $8.666 billion while its comparable sales on an owned basis jumped 1.3% (and 1.4% on an owned plus licensed basis).
Granted the comparison wasn't challenging, yet it helps support a shift in investor sentiment to see the company's sales growing again, particularly after Macy's took steps to clear excess inventory, bolster its digital business, close underperforming stores, and rethink its customer loyalty program.
The fruit of Macy's labor showed up in its bottom-line. Fourth quarter adjusted earnings per diluted share increased 40% to $2.82 and easily surpassed analysts' average expectation.
Management was encouraged by what it saw in the fourth quarter, which was accented by strong consumer spending and a trend improvement in its brick and mortar business. It was said that the retailer's base business is improved and that management sees a clear path to return Macy's to growth as it heads into 2018.
The retailer's fiscal 2018 guidance calls for total sales to be down between 0.5% and 2.0% on a 52-week basis and comparable sales on both an owned and an owned plus licensed basis to be flat to up 1.0% on a 52-week basis. Adjusted earnings per share, which include anticipated asset sale gains between $300 million and $325 million, are anticipated to be between $3.55 and $3.75 per diluted share, which is comfortably above analysts' average expectation.
Competition in the retail industry is going to remain intense, but Macy's is sounding ready to play more offense, and less defense, in fiscal 2018 as it moves ahead with its reorganization.
Investors like that mentality and undoubtedly like what they have been seeing in the stock price, which is up 12% today and up nearly 80% from the low it saw in November 2017.