The company sustained growth in ecommerce sales but also noted a pickup in store traffic in addition to sales of formalwear, jewelry, and luggage that indicate people are ready for the economy to normalize. It cited stimulus payments and the vaccine rollout for its strong quarter.
Inside the Numbers
In Q1, Macy's reported $0.39 in earnings per share which was significantly better than expectations of a $0.41 per share loss. Revenue also beat at $4.71 billion vs. $4.37 billion expected. This is a significant improvement from the year before in which Macy's sales declined by 45%.
This quarter, sales rose 62.5%, much better than expectations of 44.9% growth. The company added 4.6 million customers during the quarter. Online sales increased by 34% and now account for 37% of total sales, a 6% increase from the previous quarter.
The company benefited from the massive surge in spending on clothes as well as continued strong sales in items like home goods and kitchenware. The company is seeing results from new categories like toys, health & wellness, and toys.
The company is looking for 2021 revenue between $21.73 billion and $22.23 billion, a 7% increase from its prior range. EPS estimates were also raised to between $1.71 and $2.12 per share. Both figures also topped analysts' expectations of $0.79 per share and revenue of $20.7 billion.
Stock Price Outlook
Macy's is up 325% from its coronavirus lows. During that period, there were many who believed the company would have to file for bankruptcy. While it did have to raise money and cut costs, it seems to have survived and is now once again profitable.
Macy's is now actually above its pre-coronavirus levels but remains more than 50% off its 2018 highs. There's reason to believe that with a strong economy that consumer spending will remain strong. The company is benefitting from pent-up demand but has also used the pandemic to build a serious, ecommerce operation that is now in the top-ten and growing at a rapid rate. It's also turned its stores into distribution centers for online sales.