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Macy’s jumps on sales outlook and renewed investor payouts

Macy’s Inc. surged today after the department-store operator reinstated its dividend and raised its sales guidance, a sign that consumers are returning to the apparel market after a lengthy pandemic slump.

Same-store sales, a key retail metric, rose 61% for the company’s owned stores in the second quarter, Macy’s said today in a statement. That’s above the 43% gain expected by analysts, according to data compiled by Bloomberg. The company sees sales as high as almost $24 billion this year, an increase from its previous outlook.

Macy’s also reinstated its regular quarterly dividend of 15 cents a share, while the board authorized $500 million for share buybacks. That helped push the shares up 16% in New York trading, the most since late January. The stock had soared 61% this year through Wednesday.

The results show Macy’s is regaining its footing after the pandemic weighed on apparel demand and forced many retailers to temporarily shutter stores. The back-to-school season now underway is poised to give clothing stores a much-needed boost. However, the delta variant may still upend the improvements. During a call with analysts, Macy’s executives said shopper visits remain low in cities, where tourists and office workers are still lacking.

Nonetheless, Chief Executive Officer Jeff Gennette said second-quarter earnings were strong across the company’s brands, which also include Bloomingdale’s and Bluemercury, and said Macy’s has attracted new, younger customers.

‘Ferocious Competition’

In an interview, Gennette responded to a report that Inc. is preparing its own retail locations to compete with department stores. He said online retailers can benefit by giving shoppers more options and sales channels.

“All of that is afforded by having a very healthy brick and mortar,” Gennette said. “We have ferocious competition around the horn. It’s a big pool of retail out there.”

He added that Macy’s is focused on honing its “omnichannel strategy,” a reference to its Polaris plan that aims to the department store’s online sales performance, improve its loyalty program and expand higher-margin private label brands. The company says the strategy is working and the fundamentals of the business have improved.

The retailer also pushed deeper into the toy industry, announcing a partnership today with Toys “R” Us that will include opening branded departments in 400 Macy’s stores.

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