Macy's Inc. reported a 23 percent increase in its fiscal third quarter earnings as some expenses fell. But the department store cut its annual profit outlook because of a sales shortfall in the period.
Macy's, a standout among its peers throughout the economic recovery, is the first of the major retailers to report third quarter results, which should provide a glimpse into shoppers' mindset as the retail industry gears up for the critical holiday shopping season.
J.C. Penney reports late Wednesday and Wal-Mart Stores Inc., the world's largest retailer and Kohl's Inc. are expected to report results on Thursday.
Like many retailers catering to the middle class, Macy's is facing economic headwinds. While the job market is improving, shoppers are still grappling with stagnant wages. That environment has led several chains including Kohl's and J.C. Penney to caution that fall sales were weaker than they had expected.
Still, Macy's, which operates upscale Bloomingdale's, has benefited from its focus on tailoring merchandise to local markets. It's also trying to create a more seamless experience for shoppers who are going back and forth from stores to websites.
This fall, it's testing a same-day delivery service for products purchased at Macys.com, bloomingdales.com or on its mobile-enabled websites. Macy's is also offering same-day delivery to customers in eight major U.S. markets — Chicago, Houston, Los Angeles, New Jersey, San Francisco, San Jose, Seattle and Washington, D.C. Bloomingdale's is testing same-day delivery to customers in four major markets— Chicago, Los Angeles, San Francisco and San Jose.
The company has also rolled out to all Macy's and Bloomingdale's stores a service that allows shoppers to buy online and then pick up the merchandise from the stores.
For the period ended Nov. 1, Macy's earned $217 million, or 61 cents per share. That's up from $177 million, or 47 cents per share, a year earlier.
Analysts surveyed by FactSet predicted earnings of 50 cents per share.
Revenue dipped 1 percent to $6.2 billion from $6.28 billion. This fell short of Wall Street's forecast of $6.34 billion.
Revenue at stores opened at least a year, combined with comparable sales of departments licensed to third parties were down 0.7 percent in the third quarter. Exclusive of the licensed revenue, that number was down 1.4 percent.
Macy's Inc., which has corporate offices in New York and Cincinnati, said that it now foresees 2014 earnings between $4.25 and $4.35 per share. Its prior outlook was for $4.40 to $4.50 per share. Analysts expect full-year earnings of $4.41 per share.
Its shares rose $1.60, or 2.7 percent, to $60.19 in morning trading Wednesday.
AP Business Writer Michelle Chapman contributed to this report in New York.