Profits were better than forecasts, and costs are falling at Macy's, giving investors a reason to bid up the stock ahead of the holidays.Bobbi Rebell reports.
Happy holidays from Macy's. The department store operator - which also owns Bloomingdale's - forecast higher same-store sales growth in the holiday quarter. The key reason: it's boosting online services. S&P Captial IQ's Efraim Levy: SOUNDBITE: EFRAIM LEVY, RETAIL ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "They are trying to target the millenials and that is a growing proportion of the business and that really feeds right into the omni channel that millenials are more likely to do something on their phone or tablet when they go buying rather than actually go into the store so if they can succeed there that will put them in a good position for the rest of their business." Macy's is betting big on its Buy Online Pickup in Store option - customers shop online, then save on shipping by picking it up. The extra upside - it gets the customer into the store - part of an aggressive strategy to fight off online players like Amazon. Shares of Macy's gained on the news - which overshadowed third quarter revenues that missed forecasts. Overall profits beat. The improving economy is also a good thing - but Macy's sells mainly apparel and shoes - which are on consumers lists - but further down than cars, big ticket home items and more. SOUNDBITE: EFRAIM LEVY, RETAIL ANALYST, S&P CAPITAL IQ (ENGLISH) SAYING: "Electronics are very popular whether its your phone your tablet even computers but all types of electronic items and those are eating away at the sales you see at a Macy's which is you know apparel, men's women's clothing shoes etc. so while there is some growth in certain consumer spending its not always where Macy's would prefer it to be." A reality that is reflected in the fact that Macy's also forecast 4th quarter profits that were lower than analysts had been expecting.