Macy's (NYSE:M) delivered positive earnings for its first quarter on the heels of an increased fiscal year outlook it gave at the end of April. The department store chain had been struggling for profitability through the recession. The company said its new local approach for merchandising in its stores is paying off.

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Macy's Upswing
The company earned $23 million in net income, after an $88 million loss in last year's quarter. Earnings per share hit a positive note at five cents, compared with last year's loss of 21 cents. Revenue grew from $5.19 billion to $5.57 billion. Same store sales were up over 5%. All these are good signs for the retailer, who despite its storied Macy's and Bloomingdale's brands, had felt the press of the recession.

More Positives
The new "My Macy's" approach implemented by CEO Terry Lundgren, allows small clusters of Macy's stores to be grouped together for quicker responses to customers for merchandising. This local approach, along with a new fashion brand deal for Sean John, Sean "Diddy" Combs' label, are attempts to continue to revitalize the company's wares. Although the first-quarter results were strong, the company is still cautious on the economy, yet optimistic on having a good year.

With its changes, Macy's has gotten ahead of some of its competitors, such as JCPenney (NYSE:JCP). Macy's has lowered prices on some items while Penney continues to struggle with its home products. JCP's April sales were down 3.3%, while Macy's were up 1.1%. Dillard's (NYSE:DDS) continued to lag, down 5%, and even star retailer Kohl's (NYSE:KSS) sales dropped 7.7%. Saks (NYSE:SKS) joined Macy's in positive territory, with a 3.2% increase. It's clear that Macy's is holding its own and is poised for a sustained improvement this year.

Macy's Stock
The retailer has turned around its business, and with earnings guidance of $1.75 to $1.80 a share for fiscal 2010, its performance has been noticed by investors. The stock was recently trading at $24.21 a share, close to its 52-week high of $25.25, before falling back to $23.50 on Thursday. If the projected earnings hold up, the PE at around 14.5 is not excessive. It would of course be better to get the stock at a bargain price, so you might want to wait for another spasm in the market like we had last week to consider getting into these shares. But Macy's looks to be a company pointed in the right direction for the long haul. (To learn more, see Analyzing Retail Stocks.)

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