MACY’S INC. $54 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 376.2 million; Market cap: $20.3 billion; Price-to-sales ratio: 0.8; Dividend yield: 1.9%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states.
In the third quarter of its 2014 fiscal year, which ended November 2, 2013, Macy’s sales rose 3.3%, to $6.3 billion from $6.1 billion a year earlier. Same-store sales— which include online orders— gained 3.5%. If you include commissions from areas of its stores that Macy’s licenses to other sellers, same-store sales would have risen 4.6%.
Earnings jumped 22.1%, to $177 million from $145 million. The company spent $447 million on share buybacks during the quarter. As a result, its per-share earnings rose at a faster rate of 30.6%, to $0.47 from $0.36.
Macy’s can still spend up to $1.75 billion under its current share repurchase authorization. There are no time limits for these buybacks.
The company continues to benefit from its strategy of tailoring its merchandise to local tastes. Meanwhile, improved inventory controls are helping it avoid product shortages and cut prices without hurting its profits.
The company still expects to earn $3.80 to $3.90 a share for all of fiscal 2014, and the stock trades at 14.0 times the midpoint of the new range. The $1.00-a-share dividend yields 1.9%.
Macy’s is a buy.
