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Macy’s gets juice by ‘squeezing the same fruit’

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Cooler-than-normal weather hurt a lot of retailers this year, yet Macy's has managed to hold its own. Paul Swinand, analyst at Morningstar, said the retailer has done a good job of growing without opening new stores. Macy’s had 850 stores in 2010 and the count currently stands at 842 stores.

The company has been reinvesting within existing stores. Swinand said Macy's has been “squeezing the same fruit for a long time but they’re still getting juice.”

It’s supporting new vendors, creating new displays and working to appeal to the Millennial generation. In general, Macy's has been great at attracting a younger customer. Swinand said Macy’s has the interesting combination of cutting-edge fashion and relatively inexpensive prices. He also said it’s a good back-to-school shopping destination.

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Swinand said that while he is impressed with the steadiness of the company for the past four years, the stock is a little overvalued. Swinand said fair value is around $43 per share. The stock was trading above $48 on Tuesday.

Macy’s will report second-quarter earnings Wednesday. Analyst consensus is for a profit of 78 cents a share, compared with 67 cents a share in the year-ago quarter.

Disclosure: Swinand does not own shares of Macy’s.

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