Amidst an uneven economic recovery,
) has been able to maintain a decent sales run so far in 2012, and
we believe it will carry the same momentum over the year. The
company has been relentlessly endeavoring to keep itself on the
growth trajectory, while keeping an upbeat note in an economy that
still lacks luster.
Riding on Positive Comps
During a period from January to May 2012, Macy's has
consistently registered comparable-store sales growth. In that
period, comps growth touched a low of 1.2% and hit a high of 7.3%,
thereby recording an average growth of approximately 3.9%. In the
first five months of 2012, comps increased 2.4% in January, 4.6% in
February, 7.3% in March, 1.2% in April and 4.2% in May.
April sales were anticipated to be softer on account of the
shift in Easter and the cosmetic event to March this year from
April in the prior year. Moreover, the timing of Mother's Day in
the latter part of May also proved unfavorable for April sales.
Given the soft economic retrieval, monthly sales data for Macy's
also portrayed a decent performance. The company, in the span of
January to May 2012, registered a minimum sales growth of 0.4% and
a maximum growth of 6.9%, reflecting an average growth of
approximately 3.8% for the period. In the first five months, sales
growth was 2% in January, 5.5% in February, 6.9% in March, 0.4% in
April and 4.1% in May.
Macy's department stores sell a wide range of merchandise. Its
products include men's, women's, and children's apparel and
accessories, cosmetics, home furnishings and other consumer
In an attempt to increase sales, profitability and cash flow,
the company has been taking steps such as integration of
operations, consolidation of divisions, customer-centric
localization initiatives, as well as developing e-commerce business
and online order fulfillment centers. Moreover, Macy's continues to
focus on price optimization, inventory management and merchandise
planning to drive traffic.
However, the company's customers remain sensitive to
macroeconomic factors including interest rate hikes, increase in
fuel and energy costs, credit availability, unemployment levels and
high household debt levels, which may negatively impact their
discretionary spending, and in turn the company's growth and
Macy's, which competes with
J. C. Penney Company Inc.
), currently operates approximately 840 department stores in 45
states, the District of Columbia, Guam and Puerto Rico.
Currently, we have a long-term 'Neutral' recommendation on the
stock. Moreover, Macy's holds a Zacks #3 Rank that translates into
a short-term 'Hold' rating.
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