Why Macy’s Stock Soared Today

What happened

Shares of Macy’s (NYSE:M) surged on Thursday after the retailer delivered stronger-than-expected earnings in the second quarter and said it would resume dividend payments to shareholders. 

As of 1:15 p.m. EDT today, Macy’s stock price was up more than 20%.

So what

With the economy reopening and more people shopping inside stores once again, Macy’s net sales rocketed 58.7% from their pandemic lows in the second quarter of 2020. Broad-based growth across its merchandise categories helped to fuel a 62.2% increase in comparable-store sales.

“We successfully reengaged core customers and attracted new, younger customers with new brands and categories,” CEO Jeff Gennette said in a press release.

A person is shopping at a retail store.

Shoppers are returning to department stores faster than many investors expected. Image source: Getty Images.

Better still, inventory and cost-reduction initiatives helped to bolster Macy’s profit margins. The retailer saw its adjusted earnings per share improve to $1.29 from a loss of $0.81 in the year-ago period. That was far above Wall Street’s estimates for adjusted EPS of $0.23. 

Now what 

This strong performance and positive ongoing sales trends prompted management to boost its full-year revenue and profit forecast. The company now expects to produce net sales and adjusted EPS of $23.55 billion to $23.95 billion and $3.41 to $3.75, respectively. That’s up from its previous guidance for revenue of $21.73 billion to $22.23 billion and EPS of $1.71 to $2.12.

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Perhaps the biggest news was Macy’s decision to reinstate its quarterly dividend of $0.15 per share and begin a new $500 million stock buyback program. Management said Macy’s $2.1 billion in cash reserves, reduced debt levels, and greater profit generation made it possible to take these investor-friendly actions. 

“We are now well positioned to strengthen our business, enhance our long-term financial stability, and return capital to our shareholders,” CFO Adrian Mitchell said.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.


View more information: https://www.fool.com/investing/2021/08/19/why-macys-stock-soared-today/

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