Macy’s Jumps After Raising Profit Forecast

Macy’s Inc. (M), the second-biggest U.S. department-store chain, jumped the most in a year after boosting its 2011 profit forecast and doubling its dividend, bolstered by surging online sales.

Profit will advance to as much as $2.45 a share this year, the Cincinnati-based retailer said today in a statement. Analysts had projected $2.35 a share, the average of 14 estimates compiled by Bloomberg.

Macy’s said sales in the first quarter exceeded its expectations as online revenue jumped 38 percent and spring fashion sold strongly. Consumers have ramped up spending as the job market has improved.

“Sales were good,” Matt Arnold, an analyst with Edward Jones & Co., said in an interview today. “Clearly the dividend increase is a positive thing. That seems to be a signal of management confidence,” said Arnold, who is based in Des Peres, Missouri, and recommends holding the shares.

The company boosted the quarterly dividend to 10 cents a share. Macy’s had slashed its dividend to 5 cents from 13.25 cents in early 2009.

Macy’s rose $1.70, or 6.5 percent, to $28.03 at 10:08 a.m. in New York Stock Exchange composite trading, after earlier increasing as much as 9.3 percent, the biggest intraday gain since May 10, 2010. The shares had advanced 4.1 percent this year before today.

Same-Store Sales

Net income grew more than fivefold to $131 million, or 30 cents a share, in the three months ended April 30, from $23 million, or 5 cents a share, in the year-earlier quarter. Analysts had estimated 18 cents, the average of projections compiled by Bloomberg. Before one-time items last year, profit was 9 cents.

The retailer in February forecast annual earnings of $2.25 to $2.30. Same-store sales growth will be 4.3 percent this year, Macy’s projected today, up from a previous forecast of 3 percent.

Same-store sales climbed 5.4 percent in the first quarter. Revenue rose 5.7 percent to $5.89 billion, the company said, reiterating a May 5 statement. Before that announcement, analysts estimated revenue of $5.83 billion.

Macy’s expenses fell to $1.97 billion from $1.99 billion in the quarter. Kenneth Stumphauzer, an analyst at Sterne, Agee and Leach Inc. in New York, had estimated $2.06 billion. He rates the shares “neutral.”

Sears Holdings Corp. (SHLD) is the U.S. biggest department-store company.

To contact the reporter on this story: Cotten Timberlake in Washington at ctimberlake@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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