Macy's beats by $0.03, misses on revs; guides Q4 below consensus (lowers FY16 guidance); co will not pursue a REIT, looking to monetize real estate in other ways; inveting in digital; partners with Luxottica
- Reports Q3 (Oct) earnings of $0.56 per share, excluding non-recurring items, $0.03 better than the Capital IQ Consensus of $0.53; revenues fell 5.2% year/year to $5.87 bln vs the $6.1 bln Capital IQ Consensus.
- Comparable sales on an owned plus licensed basis were down by 3.6 percent in the third quarter. On an owned basis, third quarter comparable sales declined by 3.9 percent.
- Co issues downside guidance for Q4, sees EPS of $2.54-2.64 vs. $2.82 Capital IQ Consensus, with comps down 2-3%..
- Lowers FY16 EPS to $4.20-4.30 from $4.70-4.80; lowers comps to down 1.8-2.2% from flat.
- The board of directors has concluded that a REIT does not offer sufficient upside potential for value creation.
- Co has engaged Tishman Speyer in an expanded relationship to advise and support the company's senior management team in identifying and advancing potential store redevelopment projects nationwide.
- Co has begun a process to explore joint ventures or other deal structures with third parties to redevelop Macy's flagship real estate assets in Manhattan (Herald Square), San Francisco (Union Square), Chicago (State Street) and Minneapolis (downtown Nicollet Mall) in a manner that maintains a robust Macy's retail store presence while also bringing alternative use into those buildings; this exploration could expand to include other assets, including mall-based properties, to the extent opportunities are available.
- Co will continue to pursue selected real estate dispositions and monetize assets in instances where the business is simultaneously enhanced or where the value of real estate significantly outweighs the value of the retail business
- Luxottica (LUX) bring LensCrafters optical retail shops to as many as 500 Macy's (M) department stores in the U.S. over the next three year.
- Accelerating investments in Macy's, Bloomingdale's and Bluemercury's digital and mobile capabilities to mirror the shift to increased online shopping, where the company continues to see double-digit, year-over-year sales increases.
- Department stores: JWN, JCP, KSS, BONT; retail: XRT.