Macy's Conference Call Highlights

Macy's

reported its third quarter earnings on Monday. Shares of the company are up 5 percent. Below are some key highlights from its conference call: Financial Metrics: • Sales in the quarter were $6.195 billion down 1.3% versus last year. • And on a comparable basis, including license businesses, sales were down .7%. Excluding the License businesses, comp sales were down 1.4%. • Bloomingdale's also fell below expectation for top line sales in the third quarter. • The gross margin rate in the third quarter was flat to a year ago. • Our merchandise margin was down a tenth and delivery expenses were higher than last year. • But those factors were offset by the increase in the commissions earned on the sales of license businesses. • We ended the quarter with inventory up approximately 1% versus last year. • Credit income was $182 million, $12 million higher than last year. Usage of our proprietary cards increased 10 basis points over last year in the quarter, reaching 48.7%. • Average diluted share count was 357.7 million shares or 6% below a year ago. • Buy online/pickup in store. Same day delivery's available in eight markets, in eight big markets I might add. And it seems to be picking up. So again, we'll just have to see more as we get through Christmas but we're optimistic. Guidance: • Our EPS guidance for the year is now $4.25 to $4.35 on a diluted basis and this compares to our prior guidance of $4.40 to $4.50. • This reduction is entirely due to the impact of the reduced sales performance in the third quarter and our assumption for the fourth quarter. • This new guidance equates to fourth quarter EPS of approximately $2.30 to $2.40. • We're not counting on a lot of help from the economy this holiday but every little bit will help. • But as always, and as you've heard me describe, we have focused our energy and our resources on what we can control, which means executing a great game plan in the fourth quarter. • The table is set and we are all well prepared to drive the business as we convert customer traffic to profitable sales. • We are expecting a slight decline in merchandise margin, compounded by an increase in delivery expense, but we're hoping to be able to offset those factors again through the licensed income.