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Macy's (M) Slides 8% in a Month: What's Next for Investors?
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Shares of Macy's, Inc. (M - Free Report) have lost 7.8% in the past month. The decline was exacerbated on Jul 15, 2024, following the announcement that discussions with Arkhouse Management Co. LP and Brigade Capital Management, LP, regarding a potential acquisition were terminated.
In the said period, the Zacks Retail – Regional Department Stores industry has declined 3.2%. However, the Zacks Retail-Wholesale sector and the S&P 500 Index have risen 1.7% and 0.7%, respectively, in the same time frame.
Image Source: Zacks Investment Research
Decoding Tailwinds of the Stock
Macy’s is launching a comprehensive revitalization strategy to solidify its standing in the competitive retail market. This strategy centers on operational modernization, technological integration and enhanced customer engagement.
Through its "A Bold New Chapter" strategy, Macy's aims to accelerate financial improvements through modernization and technological integration. This includes the closure of 150 underperforming stores and the enhancement of 350 others to optimize the company’s real estate portfolio for increased profitability.
The strategy has shown early signs of success, particularly in the First 50 Macy’s nameplate stores. Under the "First 50 Pilot" initiative, the company is carefully selecting 50 store locations to test new retail strategies, such as product introductions and visual merchandising improvements. Covering geographically diverse areas, this initiative has yielded promising early results, including a 3.4% increase in comparable sales and higher customer satisfaction in the first quarter of fiscal 2024. These findings are vital for broader implementation across its stores.
Concurrently, Macy's is strengthening its omnichannel presence by revamping the company’s digital platforms and marketing strategies. By integrating online and in-store experiences and boosting digital marketing efforts, M aims to enhance the overall customer experience, increase customer loyalty and improve conversion rates.
Technological advancements, particularly the integration of artificial intelligence, are expected to streamline Macy's supply chain and enhance inventory management, thereby boosting its operational efficiency and responsiveness to market demands.
Strategically, Macy's is pursuing asset monetization by closing stores and distribution centers, aiming to generate significant capital between fiscal 2024 and 2026. This initiative underscores the company's commitment to enhancing the value of its shareholder and ensuring sustainable long-term growth. Having already raised more than $2.4 billion from real estate monetization between fiscal 2015 and 2023, Macy's is confident in its ability to secure financial stability and growth prospects.
Other Endeavors
M is set to captivate its loyal customer base with the All-Star Week, running from Jul 16 to Jul 23. This innovative event underscores the company's dedication to enhancing customer loyalty through exclusive savings and rewards for Star Rewards members. By offering enticing deals across an array of categories, from fashion essentials to home comforts, the company aims to foster deeper engagement and increase customer satisfaction.
Additionally, Macy's celebrates the back-to-school season by reintroducing Epic Threads, a children’s clothing line, which is an amalgamation of fun, functionality and sustainability. The vibrant, durable collection, available at Macy’s stores, online and via the Macy’s app, includes more than 200 items priced between $10 and $50, catering to sizes 2T to 20.
As a one-stop shop for back-to-school needs, Macy's offers a convenient shopping experience with a wide selection of trendy apparel and accessories from both private and popular brands, making back-to-school shopping enjoyable and affordable.
Growth Prospectus Ahead
Macy's ambitious targets for 2025 and beyond include annual low-single-digit growth in comparable sales and mid-single-digit growth in adjusted EBITDA. The company also aims to return to pre-pandemic levels of annual free cash flow. By streamlining operations, optimizing its real estate portfolio and leveraging AI for efficiency, M is well-positioned to thrive in an evolving market environment.
Unlocking Value
From a valuation perspective, Macy’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-sales ratio of 0.20, below the five-year median of 0.22 and the industry’s average of 0.37, the stock offers compelling value for investors seeking exposure to the sector. The stock currently has a Value Score of B, further validating its appeal.
The positive sentiment surrounding Macy's is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. In the past 30 days, analysts have increased their estimates for the current fiscal year by 25 cents. The consensus estimate is pegged at $2.79 per share. The estimate for the next fiscal year has also been raised by 23 cents to $2.80 per share.
Bottom Line
Investors should consider investing in this Zacks Rank #1 (Strong Buy) company attributed to its strategic revitalization efforts, including modernization, technology integration and enhanced customer engagement. The company's initiatives like the "First 50 Pilot" have shown early sales growth and improved omnichannel capabilities.
Other Stocks to Consider
Some other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters Inc. (URBN - Free Report) .
Gap is a premier international specialty retailer, offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.
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Macy's (M) Slides 8% in a Month: What's Next for Investors?
Shares of Macy's, Inc. (M - Free Report) have lost 7.8% in the past month. The decline was exacerbated on Jul 15, 2024, following the announcement that discussions with Arkhouse Management Co. LP and Brigade Capital Management, LP, regarding a potential acquisition were terminated.
In the said period, the Zacks Retail – Regional Department Stores industry has declined 3.2%. However, the Zacks Retail-Wholesale sector and the S&P 500 Index have risen 1.7% and 0.7%, respectively, in the same time frame.
Image Source: Zacks Investment Research
Decoding Tailwinds of the Stock
Macy’s is launching a comprehensive revitalization strategy to solidify its standing in the competitive retail market. This strategy centers on operational modernization, technological integration and enhanced customer engagement.
Through its "A Bold New Chapter" strategy, Macy's aims to accelerate financial improvements through modernization and technological integration. This includes the closure of 150 underperforming stores and the enhancement of 350 others to optimize the company’s real estate portfolio for increased profitability.
The strategy has shown early signs of success, particularly in the First 50 Macy’s nameplate stores. Under the "First 50 Pilot" initiative, the company is carefully selecting 50 store locations to test new retail strategies, such as product introductions and visual merchandising improvements. Covering geographically diverse areas, this initiative has yielded promising early results, including a 3.4% increase in comparable sales and higher customer satisfaction in the first quarter of fiscal 2024. These findings are vital for broader implementation across its stores.
Concurrently, Macy's is strengthening its omnichannel presence by revamping the company’s digital platforms and marketing strategies. By integrating online and in-store experiences and boosting digital marketing efforts, M aims to enhance the overall customer experience, increase customer loyalty and improve conversion rates.
Technological advancements, particularly the integration of artificial intelligence, are expected to streamline Macy's supply chain and enhance inventory management, thereby boosting its operational efficiency and responsiveness to market demands.
Strategically, Macy's is pursuing asset monetization by closing stores and distribution centers, aiming to generate significant capital between fiscal 2024 and 2026. This initiative underscores the company's commitment to enhancing the value of its shareholder and ensuring sustainable long-term growth. Having already raised more than $2.4 billion from real estate monetization between fiscal 2015 and 2023, Macy's is confident in its ability to secure financial stability and growth prospects.
Other Endeavors
M is set to captivate its loyal customer base with the All-Star Week, running from Jul 16 to Jul 23. This innovative event underscores the company's dedication to enhancing customer loyalty through exclusive savings and rewards for Star Rewards members. By offering enticing deals across an array of categories, from fashion essentials to home comforts, the company aims to foster deeper engagement and increase customer satisfaction.
Additionally, Macy's celebrates the back-to-school season by reintroducing Epic Threads, a children’s clothing line, which is an amalgamation of fun, functionality and sustainability. The vibrant, durable collection, available at Macy’s stores, online and via the Macy’s app, includes more than 200 items priced between $10 and $50, catering to sizes 2T to 20.
As a one-stop shop for back-to-school needs, Macy's offers a convenient shopping experience with a wide selection of trendy apparel and accessories from both private and popular brands, making back-to-school shopping enjoyable and affordable.
Growth Prospectus Ahead
Macy's ambitious targets for 2025 and beyond include annual low-single-digit growth in comparable sales and mid-single-digit growth in adjusted EBITDA. The company also aims to return to pre-pandemic levels of annual free cash flow. By streamlining operations, optimizing its real estate portfolio and leveraging AI for efficiency, M is well-positioned to thrive in an evolving market environment.
Unlocking Value
From a valuation perspective, Macy’s shares present an attractive opportunity, trading at a discount relative to historical and industry benchmarks. With a forward 12-month price-to-sales ratio of 0.20, below the five-year median of 0.22 and the industry’s average of 0.37, the stock offers compelling value for investors seeking exposure to the sector. The stock currently has a Value Score of B, further validating its appeal.
The positive sentiment surrounding Macy's is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. In the past 30 days, analysts have increased their estimates for the current fiscal year by 25 cents. The consensus estimate is pegged at $2.79 per share. The estimate for the next fiscal year has also been raised by 23 cents to $2.80 per share.
Bottom Line
Investors should consider investing in this Zacks Rank #1 (Strong Buy) company attributed to its strategic revitalization efforts, including modernization, technology integration and enhanced customer engagement. The company's initiatives like the "First 50 Pilot" have shown early sales growth and improved omnichannel capabilities.
Other Stocks to Consider
Some other top-ranked stocks in the retail space are The Gap, Inc. (GPS - Free Report) , Abercrombie & Fitch Co. (ANF - Free Report) and Urban Outfitters Inc. (URBN - Free Report) .
Gap is a premier international specialty retailer, offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank of 2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.