Macy’s reported quarterly earnings that missed analysts’ estimates for the first time in five quarters but its stock rose as it suggested the retail environment was improving.
The retailer earned 17 cents a share in the third quarter, down from 56 cents a year ago and well below the consensus estimate of 40 cents. Its unadjusted profit fell to $17 million, or 5 cents a share, from $118 million, or 36 cents a share, while revenue fell 4.2% to $5.63 billion.
Sales at Macy’s stores open at least a year fell 2.7%, the seventh straight quarterly decline but an improvement on the 3.9% drop a year ago.
Macy’s CEO Terry Lundgren said he was confident the company would meet expectations for the fourth quarter and full year, noting that “Our third-quarter top-line results were better than the first half of the year and our sales-driving initiatives continue to gain traction.”
“Additionally, the strengthening trend across the apparel businesses, coupled with new initiatives like tech watches from Apple, Michael Kors and others, are good indicators for an improved performance in the fourth quarter,” he added.
Investors apparently shared Lundgren’s confidence as Macy’s shares rose 5.6% to $40.53 in trading Thursday. The stock has climbed more than 13% in the past three months.
Macy’s and other major apparel-heavy retailers such as Kohl’s and Nordstrom are grappling with declining foot traffic at shopping malls as consumers increasingly shop online and spend less on apparel.
As Reuters reports, Macy’s has been “focusing on its huge real estate holdings as a way to shore up its business,” announcing or completing asset sales with anticipated proceeds of more than $800 million since the beginning of 2015.
The company said Thursday it had formed a partnership with real-estate investor Brookfield Asset Management to redevelop about 50 of its locations.
“We also are making good progress on our strategies to create shareholder value through our real estate, while preserving our ability to operate as a top retailer with a healthy balance sheet,” Lundgren said.