U.S. Markets closed

Macy's expects higher same-store sales growth in holiday season

People are reflected in a window outside the Macy's department store in New York in this November 22, 2013 REUTERS/Brendan McDermid

(Reuters) - Department store operator Macy's Inc (M.N) forecast higher same-store sales growth in the holiday quarter as it boosts online services, and reported a better-than-expected quarterly profit as costs fell.

Shares rose as much as 5.5 percent in late morning trading.

Macy's, which also owns the high-end Bloomingdale's chain, said it expects same-store sales, excluding licensed stores, to grow 1.8-2.8 percent in the fourth quarter — higher than the 1.4 percent growth a year earlier.

"It may be an understatement to say that we have our accelerator pedal pushed to the floor this holiday season," Chief Financial Officer Karen Hoguet said on a post-earnings call on Wednesday.

Macy's expects to gain from its 'Buy Online Pickup in Store' facility, same-day delivery pilot projects and upgraded apps — things on which it has been investing to compete with global chains and online players such as Amazon.com Inc (AMZN.O).

Picking up goods from stores after ordering online, a service being rolled out at all large Macy's and Bloomingdale's stores, is gaining popularity as customers can save shipping charges and collect orders when they want.

This also helps retailers draw more shoppers to stores.

Same-store sales at Macy's have either declined or grown slower than a year ago for 11 quarters now, except the second quarter ended Aug 2.

Macy's also forecast a fourth-quarter profit of $2.30 to $2.40 per share, lower than the $2.54 analysts were expecting on average.

Improving macro-economic indicators show that the U.S. job market has picked up, and lower gas prices have eased the pressure on consumer wallets. But stagnant wages have kept a tight lid on spending.

J.C. Penney Co Inc (JCP.N) will report results later on Wednesday, while Wal-Mart Stores Inc (WMT.N) and Kohl's Corp (KSS.N) will report on Thursday.

Macy's same-store sales, excluding licensed businesses, declined 1.4 percent in the third quarter ended Nov. 1, compared with a growth of 1.9 percent estimated by Consensus Metrix.

Net sales fell 1.6 percent to $6.2 billion. Net income rose 23 percent to $217 million, or 61 cents per share.

Analysts on average had expected a profit of 50 cents per share on sales of $6.34 billion, according to Thomson Reuters I/B/E/S.

Macy's shares were up 4.3 percent at $61.10 after touching a high of $61.80 on the New York Stock Exchange on Wednesday.


(Reporting by Sruthi Ramakrishnan in Bangalore; Editing by Savio D'Souza and Joyjeet Das)