NEW YORK (AP) ? Macy's is reporting a nearly 16 percent increase in net income for its second quarter as the department store chain continues to benefit from its strategy to tailor its merchandise to local markets.
The department chain, which operates stores under its namesake and upscale Bloomingdale's names, says it's also raising its annual earnings guidance. Its shares rose almost 3 percent in premarket trading Wednesday.
Macy's Inc., which has been a standout among its peers throughout the economic recovery, is the first in a series of major retailers that will report second-quarter results that will provide insight into how Americans are spending. Economists have worried that renewed fears about the U.S. job market and the European debt crisis will make shoppers pull back, particularly as they head into the crucial back-to-school selling season.
Like many department stores, Macy's suffered during the recession. But the retailer has been able to navigate through the slow recovery better than rivals like J.C. Penney and Kohl's. Macy's, however, acknowledged continued economic challenges.
"We were pleased with our spring season results, and they came on top of exceptionally strong spring season performances in each of the past two years," said Terry J. Lundgren, Macy's chairman, president and chief executive in a statement. "This indicates that our business continues to have forward momentum, even with challenges that include a soft economy, lower spending by international tourists and temporary disruptions" related to its major renovation of its flagship store in Manhattan.
Macy's said that its net income rose to $279 million, or 67 cents per share, for the three-month period ended July 28. That's up from $241 million, or 55 cents per share, in the year-ago period.
Revenue rose 3 percent to $6.12 billion from $5.94 billion a year ago. Revenue at stores open at least a year, a key gauge in measuring a retailer's health, also rose 3 percent.
Analysts surveyed by FactSet had expected earnings of 64 cents per share on revenue of $6.12 billion.
"We are entering the fall season with optimism about our ability to grow sales and capture market share...The direction of the overall economy is outside our control, so we will concentrate on what our company does best," Lundgren said in a statement.
A big part of Macy's strategy has been to tailor its fashions to local markets.
Macy's, based in Cincinnati, Ohio, has been catering to customers in a way that had been lacking since the chain ditched its numerous regional nameplates such as Marshall Field's and Hecht's in 2006. For example, the retailer has increased its offerings of conservative business suits in Washington, D.C.,
The company also has added exclusive brands, including Tommy Hilfiger sportswear and the Material Girl fashion collection, created by pop star Madonna and her daughter Lourdes. Other initiatives included better training for its sales force.
The company said that it now expects earnings per share for the full year to be in the range of $3.30 to $3.35. That's an increase from its previous guidance of $3.25 to $3.30. The company, however, still believes that that revenue at stores opened at least a year will rise about 3.7 percent for the year.
Analysts expected earnings of $3.36 for the year.
Its shares rose $1, or 2.7 percent, to $38 in premarket trading.
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