Will This Quarterly Report Show Macy’s Is Back on Track?

Macy’s Inc. (NYSE: M) is set to report its most recent quarterly results before the markets open on Tuesday. The consensus estimates are calling for $1.96 in earnings per share (EPS) and $8.32 billion in revenue. The fiscal fourth quarter from last year reportedly had $2.73 in EPS and $8.46 billion in revenue.

Earlier this month, Macy’s announced that it will close 125 stores and cut 2,000 people. Retail stock analysts remain worried. Among the 16 analysts who cover the company, according to The Wall Street Journal, eight rate the stock as a Hold and five as a Sell. Their median price target is $16.

The worry about Macy’s is that, even with cost cuts, its top line will still drop over the next several years, along with same-store sales. The point was made that Macy’s cut unprofitable stores and kept those that make money. An overall sales drop will cut into the performance of those better stores.

Macy’s other problem is the risk that not many brick-and-mortar companies can stay alive. Target has had some success so far. So has Macy’s rival Nordstrom. As the physical store battle gets more desperate, the winners will be those who do best as they fight for market share. In addition, the pie will not get bigger. In fact, some believe that it will shrink.

Excluding Monday’s move, Macy’s stock has underperformed the broad markets with a pull back of about 34% in the past 52 weeks. In the past quarter alone, the share price is actually about 8% higher.

Here’s what a few analysts had to say about Macy’s ahead of the report:

  • Evercore has a Buy rating with a $22 price target.
  • Guggenheim rates the shares at Hold.
  • Telsey Advisory Group rates it as Market Perform with an $18 target.
  • Atlantic Securities has a Neutral rating and an $18 target price.
  • Morgan Stanley has an Underweight rating and a $13 price target.
  • The Goldman Sachs Sell rating comes with a $12 price target.

Macy’s stock traded down over 3% at $15.65 on Monday, in a 52-week range of $14.11 to $26.33. The consensus price target is $16.19.

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