On Aug 19, we downgraded our long-term recommendation on
) to Neutral based on the company's dismal second-quarter fiscal
2013 performance. The stock currently carries a Zacks Rank #3
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
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.
Fortune Brands Home & Security, Inc.
Lumber Liquidators Holdings, Inc.
), all sporting a Zacks Rank #1 (Strong Buy).
CITI TRENDS INC (CTRN): Free Stock Analysis
FORTUNE BRD H&S (FBHS): Free Stock Analysis
LUMBER LIQUIDAT (LL): Free Stock Analysis
MACYS INC (M): Free Stock Analysis Report
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