Macy's stock climbs after topping Q1 earnings estimates

Shares of Macy's (M) are climbing higher after the company topped first quarter earnings expectations and raised its full-year guidance.

Yahoo Finance Reporter Brooke DiPalma breaks down the earnings report and the department store chain's turnaround strategy amid weak consumer spending.

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This post was written by Melanie Riehl

Video Transcript

Checking in on some of today's other trending tickers.

Let's talk about Macy's, those shares are higher after the company top first quarter earnings expectations and raised its full year earnings guidance.

Young Finance is Brooke De Palma here with some takeaways from the last quarter.

As you pointed out, you write up this morning.

Yes, they beat.

But the expectations were quite low.

The expectations were quite low for our department store chain that is in between a turnaround strategy or a buy out bid.

And so Wall Street was and at the the day, somewhat in press shares up now, roughly 3%.

But what the CFO uh Macy's CFO Adrian Mitchell did tell Yahoo Finance was that in the early days of their new chapter or their new uh strategy, that bold new chapter they call it.

They do believe that they're getting traction.

They did say that it's early days though.

And what gives them confidence that this turnaround strategy is working and giving the street confidence as well is that those 1st 50 stores that they invested in, they saw sales uptick of three 0.3% and they're introducing new brands, think free people French connection, a more higher end brand that seems to be trending well with customers.

They're also increasing staffing, visual presentation and digital investments at those locations.

Now, as far as uh the outlook for the company, they do expect sales to come in between a 1% drop to 1.5% lift.

But CFO Adrian Mitchell once again, citing that this is a difficult consumer background environment and they continue to believe that there's a lot of uncertainty and inflation continues to remain stubborn, perhaps pushing off uh customers from coming in more.

But luxury brands continues to do well for them.

They're seeing a lot more ground there.

They believe Blue Mercury saw comps up 4.3%.

They plan to build out 30 stores in the next three years and Bloomingdale's comps were up 0.3%.

They plan to build out 15 stores across outlets in smaller format.

So people still liking and going to those luxury region.

I thought it was interesting, Brooke and you, you touched on there sort of the commentary and color.

We got about how they were thinking about the consumer Ceo Tony Spring, right?

He's talking, yeah, Tony Spring was talking about, listen, strong job growth and wage growth.

But to your point, he also talked about stubborn inflation and, and it's a headwind for his, for his customers.

Yeah, it absolutely is.

And what's interesting is we're seeing these two different dynamics play out under one company, you have those luxury brands that seem to be doing somewhat well, definitely better than the everyday Macy's customer.