Macy’s Inc. boosted its full-year earnings forecast, citing a “strengthening trend” starting in the fourth quarter, and announced a deal to purchase beauty and spa chain Bluemercury.
The department-store operator expects adjusted profit for the year ended Jan. 31 to be as much as $4.35 to $4.37 cents a share, according to a statement on Tuesday. Macy’s had previously predicted $4.25 to $4.35, while analysts had estimated $4.33 on average. Comparable sales in the fourth quarter increased 2.5 percent, less than the company’s earlier forecast of as much as 3 percent growth.
The Cincinnati-based retailer has been cutting expenses to make up for disappointing sales in the third and fourth quarters. While the company hasn’t had to rely on discounts, it has struggled to entice shoppers. Macy’s cut its full-year profit forecast in November from $4.50 a share. Chief Executive Officer Terry Lundgren is working to strengthen the company’s offerings by adding new brands, including Bluemercury, which will open small boutiques in some Macy’s stores.
Macy’s said Tuesday that it would pay $210 million in cash for Bluemercury and plans to expand the chain of luxury spas, enhance online and mobile selling, and add Bluemercury products and boutiques to Macy’s stores. Washington-based Bluemercury has 60 stores with 500 associates.
“With Bluemercury, our company can access a new channel to reach additional customers, add new dimensions to our product offering and apply our expertise in omnichannel retailing,” Lundgren said in a statement.
The deal, which will be completed in the first quarter, will add to earnings in its first full year. Credit Suisse Group AG advised Macy’s, and Goldman Sachs Group Inc. advised Bluemercury.
The shares fell as much as 1.6 percent to $65.03 in extended trading in New York after gaining 2.9 percent to close at $66.07. The stock had climbed 23 percent last year, compared with an 11 percent increase in the Standard & Poor’s 500 Index.
The company also said in a separate statement that Timothy Baxter would become chief merchandising officer, replacing Jeff Gennette, who will oversee merchandise planning.
Macy’s is scheduled to report fourth-quarter earnings before the market opens on Feb. 24.
--Additional reporting by Allison Collins