Macy's Downgraded to Neutral - Analyst Blog

By
A A A

On Aug 19, we downgraded our long-term recommendation on Macy's Inc. ( M ) to Neutral based on the company's dismal second-quarter fiscal 2013 performance. The stock currently carries a Zacks Rank #3 (Hold).

Why the Downgrade?

Estimates for Macy's have shown a downtrend since the company reported disappointing second-quarter results on Aug 14, 2013. The company posted lower-than-expected results as consumers' cautious attitude toward making any discretionary purchases resulted in soft sales. Moreover, discounts offered hurt margins. As a result, management trimmed its comparable sales and earnings outlook.

The quarterly earnings of 72 cents a share missed the Zacks Consensus Estimate of 78 cents. However, the quarterly earnings registered year-over-year growth of 7.5%. Total sales edged down 0.8% to $6,066 million in the quarter but fell short of the Zacks Consensus Estimate of $6,246 million. Comparable-store sales for the quarter also slipped 0.8%.

Following soft results, Macy's now anticipates comparable-store sales growth of 2% to 2.9% for fiscal 2013. Management now forecasts full-year earnings in the band of $3.80 to $3.90 per share. Earlier, the company had envisioned comps growth of 3.5% and earnings between $3.90 and $3.95 per share for the fiscal year.  

Consequently, we are witnessing a fall in the Zacks Consensus Estimate, as analysts become less constructive on the stock's future performance. The Zacks Consensus Estimate for fiscal 2013 fell by 2.5% to $3.85 and for fiscal 2014 it tumbled by 3.8% to $4.32 per share, over the past 30 days.

Going forward, management remains optimistic on capturing the back-to-school season opportunities with its fresh inventory along with My Macy's localization initiatives, omnichannel integration and Magic Selling.

Other Stocks that Warrant a Look

Other stocks worth considering in the retail sector include Citi Trends, Inc. ( CTRN ), Fortune Brands Home & Security, Inc. ( FBHS ) and Lumber Liquidators Holdings, Inc. ( LL ), all sporting a Zacks Rank #1 (Strong Buy).



CITI TRENDS INC (CTRN): Free Stock Analysis Report

FORTUNE BRD H&S (FBHS): Free Stock Analysis Report

LUMBER LIQUIDAT (LL): Free Stock Analysis Report

MACYS INC (M): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CTRN , FBHS , LL , M

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

100%
100%
50%
63%

Most Active by Volume

270,887,127
    $93.89 unch
225,243,115
  • $40.93 ▼ 2.74%
135,900,109
  • $47.52 ▲ 1.80%
89,467,924
  • $5.35 ▼ 1.11%
85,105,358
  • $16.95 ▼ 0.53%
80,748,539
  • $39.80 ▼ 4.21%
68,491,586
  • $3.57 ▼ 1.79%
62,097,356
  • $100.96 ▼ 0.82%
As of 9/19/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com