Macy's (M) stock was up and down on Wednesday morning after the company reporting earnings that came in line with revenue expectations -- and easily exceeded earnings per share estimates.
The Cincinnati-based retailer reported $0.27 in earnings per share for the third quarter, besting analyst estimates by $0.12 and hit dead on the $5.4 billion revenue bar set by Wall Street.
The company also reported strong same-store sales growth, up 3.3% against estimates of 2.8%. In addition, the company raised its guidance figures on both earnings per share and same-store sales ahead of the holiday season.
"We are pleased with Macy's, Inc. performance in the third quarter, marking our fourth consecutive quarter of comparable sales growth," Jeff Gennette, Macy's, Inc. chairman and CEO said in a statement. "Our strategic initiatives are gaining momentum and delivering results."
Of particular note was the expansion in the company's digital business, which reported strong growth quarter over quarter, bolstering sales while the company improves its brick-and-mortar base.
"Another double-digit quarter from our digital business and a strong stores performance combined to help us exceed expectations," Gennette said. "We continue to see an improved trend in brick and mortar across the fleet, with particularly strong results from our Growth50 stores."
The volatility in the stock after a positive earnings report adds to concerns brought on by the nearly 14% loss shares have incurred in the past three months.
The stock seems to do little but sink, lately.
Guiding Higher to the Holidays
Possibly pointing to a way upward, Macy's executives have raised guidance into the all-important fourth quarter.
"The holiday season is when Macy's truly shines," Genette explained. "We have the right merchandise, the right marketing and the right customer experiences in place to deliver a strong fourth quarter."
As such, Gennette revised both net and comparable sales guidance upward on an annual basis.
Earnings per share guidance was likewise raised to a range of $4.10 to $4.30, up from a prior range of $3.95 to $4.15.
Gennette noted that "strategic initiatives" will help the company deliver a strong holiday season and achieve his bullish targets.
Notable among current initiatives are the push into digital, downsizing efforts to maximize the utility of space used and cut expenses on inventory, staffing and rent, as well as the addition of a new off-price brand, "Backstage," that will try to keep pace with leading discounters like TJ Maxx (TJX) .
The slashes to the company's inventory and real estate needs might help offset the company's gross margin concerns, which was reported as flat year over year.
Presentation Prep
The stock was wavering Wednesday morning, dropping slightly after a quick pop on the release before coming back up and then back down to its current state.
As such, it will be incumbent upon Gennette to make sure a positive trend in the stock can come soon.
Some issues that will come up will be related to hiring increases needed for the holiday season, tariff concerns and concerns that digital may be a losing battle against Amazon (AMZN) .
On the earnings call Wednesday morning, executives might be well advised to lean into these issues and confront them so as to not have them weigh on an otherwise-positive release.
The webcast presentation will be available here at 9:30 a.m. ET.
