Forget about those lackluster numbers Macy’s (M) posted earlier today. It's still poised to win the holiday season. So says Jessica Bornn of Merchant Forecast.
“Fourth quarter is when Macy’s knocks it out of the park,” she notes. “I think the fourth quarter numbers are going to be far better than third quarter and I think they’re probably going to surprise.”
They had better, especially after lowering the profit guidance bar to $4.45 a share from $4.50 and reporting a same-store sales figure that dipped 1.7% in Q3.
“If you compare Macy’s to the rest of their department store peers they really are best in class and they have been for a number of years,” Bornn insists, pointing out that Macy's has done a better job than most at finding its core customer.
For instance, a new app aims to allow users to snap a picture of an outfit and Macy’s will spit back similar style items from their store.
“Many of [Macy’s] peers are having identity crises and they’re struggling to find their fashion mix, their customer, how to attract that customer, and Macy’s is still the best in class and we believe they will remain the best in class."
That’s not to say other department stores can’t co-exist, even in the same mall. Bornn believes J.C. Penney (JCP) is making strides at winning back the customers that were “fired” in the Ron Johnson experiment. She notes that JCP and Macy’s also have unique enough customer bases for both to survive.
“We are generally bullish on the department store sector for the holiday period,” she says. “We think J.C. Penney, Kohl’s (KSS) could actually show some improvement. They’ve done everything wrong for a number of years. They could stand to really do better this time.”
That said, she’s careful to point out that Macy’s still gets the A+!
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