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Macy's Early Holiday Gift: Strong 3Q Earnings

Sunday, November 13, 2011

Macy's flagship store in Hearld Square Macy's flagship store in Hearld Square (Courtesy of Macy's)

The holidays sales season officially gets underway around Thanksgiving. But for Macy's, it's almost like Christmas came early. The retailer posted strong third quarter results.

Macy's said it earned $139 million in the third quarter of this year, beating analysts’ expectations. Compare that to just $10 million it earned in the same period a year ago. Macy's credits its new localized sales strategy for the uptick. Merchandise now varies according to the customers in each local store. 

The retailer is so optimistic, it has announced it will add three new stores, including one at the Bay Plaza Shopping Center in the Bronx that is scheduled to open in 2014.

Faith Hope Consolo, an analyst with Prudential Douglass Elliman, said the expansion in the Bronx is long overdue. "I think the Bronx has seen a lot of change.  I think you've got very important developments going there, easy transportation, and Macy's is expanding in a back yard where they've done well," she said. 

Macy's is expecting its fourth quarter sales to increase by 4 percent or 4.5 percent. 

But Consolo expects retailers will see this year's holiday sales increase by about half that. 

Consolo said mid-level department stores have made a comeback over last year by offering near constant sales and deals.  She expects that trend will continue this year. 

Also important over the holiday sales season is accessibility. "It's not Black Friday anymore, it's Black Midnight," Consolo said, referring to many stores, including Macy's decision, to open at midnight on Black Friday, the traditional start of the holiday shopping season.

Consolo said stores must be open and offer customers a good reason to come in, as opposed to shopping on online. 

Macy’s has reason to be happy there as well. Consolo also pointed out that Macy's online sales skyrocketed this year, increasing almost 40 percent in the third quarter.

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