Macy’s Inc. (M)Stock: Better Than You Think

Macy’s Inc. (NYSE:M), an American department store operator, published outstanding fourth-quarter 2021 earnings last week. The company boosted like-for-like sales, revenue, and profitability, as well as announcing a 5% dividend raise to shareholders.

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Macy’s appears to have made a full recovery from the pandemic’s dark days.Last week, the business released yet another impressive report. In comparison to the fourth quarter of 2019, like-for-like sales climbed by more than 6%.This was bolstered by a 36 percent increase in digital revenues year over year. Macy’s had a total revenue of $8.67 billion.

Macy’s topped Wall Street analysts’ expectations with adjusted earnings per share of $2.45, thanks to strong sales and cost efficiency. In fiscal 2021, the department store company generated more than $2 billion in free cash flow, with the majority of that arriving in the fourth quarter. The corporation had $1.7 billion in cash on its balance sheet at the end of the year.

Management has given cautious advice for the first quarter of 2022, predicting that spending will rise as a result of rising wages and some consumer spending restraint. Sales are forecast to be in the range of $5.27 billion to $5.37 billion, with adjusted earnings per share ranging from $0.77 to $0.85. Macy’s forecasts sales and profitability to fall even more in the second quarter from multi-year highs reached in fiscal 2021. As a result, the company expects sales to increase by a maximum of 1% by the end of the year. The adjusted earnings per share range will be $4.13 to $4.52.

Macy’s has also stated that it will keep investing in affiliate networks, digital sales, and new store formats.

Nonetheless, Macy’s plans to earn $3.2 billion to $3.6 billion in free cash flow over the next three years, despite greater investments in technology and other growth drivers. The company will almost certainly return the majority of this money to shareholders. As a result of this optimism, management announced a 5% quarterly dividend hike and a new $2 billion share repurchase programmer.