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: Macy’s reports earnings beat, hikes dividend, approves $2 billion share repurchase program

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Macy’s Inc. shares rose 8% in Tuesday premarket before pulling back 4% during trading hours after the department store retailer reported fourth-quarter earnings that beat expectations and announced a dividend hike.

Net income totaled $742 million, or $2.44 per share, up from $160 million, or 50 cents per share, last year. Adjusted EPS of $2.45 exceeded the FactSet consensus for $2.01. Sales of $8.665 billion were up from $6.780 billion and ahead of the FactSet consensus for $8.465 billion. Digital sales were up 12% and accounted for 39% of net sales.

Comparable sales on an owned basis were up 28.3%, and increased 27.7% on an owned-plus-licensed basis. The FactSet consensus was for a comparable sales increase of 25.1%.

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Bloomingdale’s comparable sales were up 37.8% on an owned basis and up 37.6% on an owned-plus-licensed basis. And Bluemercury comparable sales rose 30.9% on both an owned and an owned-plus-licensed basis.

Macy’s
M,
-3.83%

announced a new $2 billion share repurchase program after completing a previous $500 million program.

The company also raised its dividend by 5% to 15.75 cents per quarter, payable on April 1 to shareholders of record as of close of business March 15.

Activist investors Jana Partners had called for Macy’s to separate its e-commerce business from its brick-and-mortar stores. The company has completed a business review and says it has determined that continuing as an omnichannel operation would be the better option.

See: Macy’s upgraded but Nordstrom downgraded, as department store category continues to shift

“Key to the Board’s decision-making were the high separation costs and ongoing costs from operating separated businesses, as well as high execution risk for the business and the company’s customers. As a result of the review, the company is accelerating Polaris initiatives that span digital, brand partners, private label, marketing and loyalty and the expansion of off-mall, small-format Market by Macy’s and Bloomie’s stores,” the company said in a statement.

Polaris is Macy’s turnaround strategy, which was launched two years ago.

For 2022, Macy’s is guiding for sales of $24.46 billion to $24.70 billion, and adjusted EPS of $4.13 to $4.52.

The FactSet consensus is for sales of $24.34 billion and EPS of $4.09.

Macy’s stock has run up 62% over the last year while the S&P 500 index
SPX,
-0.40%

is up 11.8% for the period.

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