Macy’s Shares Fall Despite Improved Earnings

Earnings for high-end department store Macy’s (NYSE: M) shot up 38% in the first quarter, but an unimpressive full-year outlook sent the stock spiraling downward.

Macy’s shares fell nearly 4% today because the company maintained its previous full-year earnings outlook of between $3.25 and $3.30 per share. Analysts were expecting the company to bump their outlook up to $3.39 a share.

Part of today’s post-earnings pullback is just the latest evidence of a growing trend this earnings season. As our own Ian Wyatt wrote earlier today, stocks rose at such a rapid pace over the first three months of 2012 that they had little room left to grow. Most stocks were already over priced, so even solid first-quarter earnings weren’t enough to give them their traditional bump.

That seems to be the case with Macy’s. The stock was up 23% year-to-date entering the day. So even the slightest sign of weakness – such as full-year earnings guidance remaining flat – was enough to push the stock down a few percentage points.

The good news for Macy’s shareholders is that the company is growing. And that’s more than many of its chief rivals can say.

Fellow department-store chains J.C. Penney (NYSE: JCP) and Kohl’s (NYSE: KSS) have seen their stocks either decline or post modest gains so far this year. J.C. Penney shares have fallen 5.5% this year. Kohl’s is up only 3%. And while Macy’s profits increased to $181 million last quarter – up from $131 million in the same quarter a year ago — J.C. Penney failed to turn a profit in each of the last two quarters.

So for the most part, Macy’s appears to be in pretty good shape – even if its stock isn’t acting like it today. 

Published by Wyatt Investment Research at