* Q3 ex-items $0.08 vs Street view $0.05
* Sees Q4 same-store sales up 3-4 pct
* Now sees FY 2010 EPS $1.94-$1.99 vs Wall St view $1.96
* Kohl's sees Q4 same-store sales up 2-4 pct
* Macy's shares off 1.4 pct; Kohl's up 1 pct after-hours
(Adds Kohl's results, analyst quote)
By Phil Wahba
NEW YORK, Nov 10 Macy's Inc (M.N) forecast strong
sales during the upcoming holiday season, saying it expects the
success of its efforts to cater to local tastes and an uptick in
spending at its upscale Bloomingdale's chain to continue.
Chief Executive Terry Lundgren said his company's performance
"bodes well for our business as we enter the holiday selling
season" after it reported better-than-expected third-quarter sales
Lower-priced rival Kohl's Corp (KSS.N) also forecast higher
sales during the holiday season. [ID:nN10231951]
Macy's has led the charge among department store operators,
consistently beating Wall Street sales forecasts, winning market
share from rivals such as J.C. Penney Co Inc (JCP.N), and deftly
positioning itself to take advantage of the recovery in the middle
class's ability to spend, analysts said.
Sales rose 6.6 percent to $5.62 billion during the quarter
ended Oct. 30, beating Wall Street forecasts of $5.56 billion,
according to Thomson Reuters I/B/E/S.
Macy's sales at stores open at least a year, or same-store
sales, rose 3.9 percent during the quarter, and Macy's reaffirmed
its forecast that fourth-quarter same-store sales would grow by 3
percent to 4 percent.
(For a graphic of Macy's recent same-store sales performance,
please see: r.reuters.com/res74q)
Later on Wednesday, Kohl's said it expected same-store sales
to rise 2 percent to 4 percent in the fourth quarter, and its
shares rose 1 percent in after-hours trading.
The holiday forecast comes after Kohl's last week reported an
unexpected 2.5 percent drop in same-store sales in October.
"The sales forecast implies October was an anomaly for
Kohl's," said Walter Stackow, an analyst with Manning Napier.
"Kohl's and Macy's have been gainers all year and market share
begets market share," Stackow said.
Macy's gross margins edged down only slightly, falling 0.2
percentage point to 40 percent, signaling the retailer's inventory
did not build up too much and a lower risk of discounting during
the upcoming holidays.
"I think they're well positioned for the holidays in the sense
that inventory is clean-- they've got stuff people want," said
Morningstar analyst Paul Swinand.
Swinand also said that Bloomingdale's, which accounts for
about 10 percent of sales, had allowed Macy's to benefit from the
strong comeback in luxury sales in the United States.
Macy's shares, which last week hit a yearly high after the
company reported strong October sales and raised its forecast,
closed down 36 cents or 1.43 percent at $24.86. The S&P Retail
Index .RLX was up 0.8 percent. Kohl's shares ended down 3 cents
at $52.26 before rising to $52.75 in after-hours trading following
its earnings report.
MORE EXCLUSIVE, MORE REGIONAL
Macy's credited its exclusive product lines by top names such
as Madonna and Kenneth Cole for differentiating it from rivals and
luring shoppers for its strong quarter.
The company has also aggressively sought to land more
exclusive lines in a bid to give shoppers a reason to go to Macy's
rather than Penney and Kohl's, which have also been racing to win
their own exclusive merchandise lines.
Swinand and other analysts have said that the company's
MyMacy's program, launched two years ago, has allowed Macy's
regional managers to focus on each market's tastes and garner
Macy's reported net income of $10 million, or 2 cents per
share, for the third quarter ended Oct. 30, compared with a
year-earlier loss of $35 million, or 8 cents per share.
Excluding one-time items, Macy's reported a profit of 8 cents
per share, beating Wall Street's average forecast of 5 cents.
Macy's raised its full-year profit outlook by 5 cents to a
range of $1.94 to $1.99 a share. That compares with Wall Street's
average estimate of $1.96, according to Thomson Reuters I/B/E/S.
(Reporting by Phil Wahba; Editing by Lisa Von Ahn, Dave
Zimmerman, Phil Berlowitz)