Macy’s (NYSE:M) stock price sat at $51.84 at the beginning of the trading day Thursday after shares rose as much as 5 percent after the bell the day before. According to Reuters, Macy’s reported a successful holiday shopping season on Wednesday and offered 2014 forecasts that far surpassed what analysts were expecting.
Macy’s has enjoyed stronger sales than many of its rivals like Kohl’s (NYSE:K), J.C. Penney (NYSE:JCP), Wal-Mart Stores (NYSE:WMT), and Target (NYSE:TGT) due to its widespread consumer base. Though Macy’s operates the high-end Bloomingdale’s chain, the company also has taken steps this year to cater more to its cost-conscious customers by increasing its selection of lower-priced items and boosting advertising and in-store signage during sales events.
Reuters reports that Macy’s comparable sales — online sales and sales at stores open at least a year — rose 3.6 percent in November and December, close to the same figure Macy’s reported for its third quarter, when it easily outperformed rivals. Macy’s, along with its competitors, benefited from a stronger-than-expected holiday season this year. Data firm ShopperTrak initially anticipated retail sales in November and December to only rise 2.4 percent, but the firm reported Wednesday that sales rose 2.7 percent across the industry.
Macy’s had good news to report Wednesday, driving up shares 5 percent after the bell, but it also offered several warnings to its workforce as it shared its plans to cut about 2,500 jobs in 2014, or 1.4 percent of its overall U.S. workforce. The layoffs are part of the company’s new cost-cutting initiative to save the retailer about $100 million annually.
Other forecasts Macy’s provided Wednesday included its profit predictions for 2014. According to Reuters, the department store operator forecasts a profit of $4.40 to $4.50 per share for the next fiscal year, while analysts were only expecting around $3.87. The next fiscal year starts in February, and Macy’s expects its comparable sales to grow 2.5 percent to 3 percent starting during that time.
Macy’s now is one of the only middle-of-the-road department store operators that is still consistently thriving. Macy’s still focuses much of its attention on the middle-class segment, and that clientele is helping the department store prosper.
The company has effectively proven to be more aggressive at wooing shoppers on a modest budget and it has its growing online business to thank for that. The company plans to bolster its online business by adding more employees to the division, but for now, it will need to focus on cutting jobs before adding them.