We maintain our 'Neutral' recommendation on
), with a target price of $43.00, as frugal shoppers, soft
economic recovery and the impact of Hurricane Sandy still remain
the causes for concern.
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However, it is encouraging to note the company's sustained focus
on price optimization, inventory management, merchandise planning
and private label offering, which positions it well to drive
traffic, meet customer-oriented demand and improve in-store
Macy's recently came up with its third-quarter 2012 earnings,
wherein the quarterly earnings of 36 cents a share came ahead of
the Zacks Consensus Estimate of 29 cents, and rose 12.5% year
over year on the back of My Macy's localization initiatives,
omnichannel integration, robust online sales and effective cost
Total sales grew 3.8% to $6,075 million in the quarter.
Management now guides fiscal 2012 earnings in the range of $3.35
to $3.40 per share. This is the 11th straight quarter that the
company has witnessed top and bottom line growth.
Following strong results, management now expects fiscal 2012
earnings between $3.35 and $3.40, up from a range of $3.30 to
$3.35 per share forecasted earlier. For the fourth quarter,
earnings are projected between $1.94 and $1.99 per share.
Moreover, Macy's raised its guidance of comparable-store sales
for the second half of fiscal 2012. Management now anticipates
growth of about 4% in comparable-store sales compared with its
earlier guidance of 3.7%. For the fourth quarter and fiscal 2012,
comparable-store sales are projected to increase by 4.2% and
3.9%, respectively. Macy's projects sales in the fourth quarter
to be up 7.2%. Management expects comparable-store sales growth
in November to be soft due to the impact of Hurricane Sandy.
Buoyed by better-than-expected results, the Zacks Consensus
Estimates for fiscal 2012 and 2013 have been on the rise. The
Zacks Consensus Estimate for 2012 increased 3 cents to $3.41 per
share in the last 30 days as 11 out of 13 estimates were raised,
while one was lowered.
Moreover, for 2013, the Zacks Consensus Estimate increased 3
cents to $3.88 per share, as 9 out of 14 estimates were revised
upward, while two moved in the opposite direction.
Currently, Macy's, which competes with
), holds a Zacks #2 Rank that translates into a short-term "Buy"
rating as we remain optimistic about the company's
customer-centric localization initiative called 'My Macy's' and
the company's upbeat outlook.