Updated Research Report on Macy's


My Macy's localization initiatives, omnichannel integration, Magic Selling and promotional strategies facilitated Macy’s Inc.’s (M) to post better-than-expected fourth-quarter fiscal 2013 results amid a tepid economic environment.

The quarterly earnings of $2.31 per share surpassed the Zacks Consensus Estimate of $2.17, and rose 13% from $2.05 earned in the prior-year quarter. Effective cost management also provided cushion to the bottom line. This is 16th successive quarter in which this Cincinnati, Ohio-based company has registered year-over-year growth in earnings per share.

We believe Macy’s sustained focus on price optimization, inventory management, merchandise planning and private label offering are the primary catalysts driving traffic, facilitating in meeting customer-oriented demand and improving in-store shopping experience.

However, total sales tumbled 1.6% to $9,202 million in the quarter from $9,350 million in the year-ago period, and also fell short of the Zacks Consensus Estimate of $9,288 million.

On the contrary, comparable-store sales for the quarter rose 1.4%, while including sales generated from third party licensed departments, comparable sales jumped 2.3%. However, sales during the January month disappointed when compared with November and December due to adverse weather conditions and calendar shift.

We believe consumers remain wary of making any discretionary purchases.

Moreover, we are cautious about margins being under pressure if the company employs an aggressive pricing strategy to drive in customers. However, Macy’s has undertaken certain cost containment initiatives and changes in the organizational structure to keep itself on the growth trajectory.

Macy’s currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

Other better ranked stocks worth considering in the retail sector include Hanesbrands Inc. (HBI) and Michael Kors Holdings Ltd. (KORS) both carrying a Zacks Rank #1 (Strong Buy), while G-III Apparel Group, Ltd. (GIII) sports a Zacks Rank #2 (Buy).

Read the Full Research Report on M
Read the Full Research Report on KORS
Read the Full Research Report on HBI
Read the Full Research Report on GIII

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