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Reuters
Published
Feb 26, 2013
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Macy's and Saks beat holiday quarter expectations

By
Reuters
Published
Feb 26, 2013

Department store chains Macy's and Saks both beat holiday quarter profit estimates and on Tuesday said sales at established stores were expected to rise in 2013, as they invest in online technology.

Macy's, which has been actively wooing "millennials," or shoppers born in and around 1980s, has invested heavily in its technology systems to bring more stores online with its e-commerce business.

"Even though the results are kind of tepid, managements are starting to wake up and invest a little, which is very important for the economy," Paul Swinand, an analyst with Morningstar said.

For the quarter, online sales at the company that also operates the Bloomingdale's chain of luxury stores, soared 47.7 percent.

The retailer reported net income of $730 million, or $1.83 per share for the quarter that ended Feb. 2. Excluding pretax expenses, it earned $2.05 a share, while analysts, on average, were expecting $1.99 a share.

Saks, which has been investing tens of millions of dollars into updating e-commerce systems as it tries to catch up to Nordstrom Inc, earned $20.4 million, or 13 cents per share for the quarter that ended Feb. 2, versus a year-earlier profit of $40 million, or 21 cents per share.

Excluding store closing expenses, asset impairment charges and other items, Saks had a profit of 17 cents per share. Wall Street analysts were expecting 15 cents, according to Thomson Reuters I/B/E/S.

These investments should result in higher margins in the future, analyst Jennifer Davis of Lazard Capital wrote in a note, adding that near-term margins, however, will be pressured as Saks makes investments in areas like shoes and handbags as well as in technology.

Chief Executive Stephen Sadove said while he expects 2013 to be "somewhat volatile" as higher tax rates take effect, he also expects sales at established stores to rise 3 percent to 5 percent for the full year.

Macy's said it expected same-store sales to rise about 3.5 percent during the year and forecast earnings of $3.90 to $3.95 a share, compared with an average Wall Street estimate of $3.41, according to Thomson Reuters I/B/E/S.

Macy's shares were up 3.3 percent at $39.78 on the New York Stock Exchange. Saks' shares gained about 2 cents to $11.06, also on the NYSE.

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