Bear of the Day: Macy's (M)

Macy’s M, a current Zacks Rank #5 (Strong Sell), is a trusted retail source for quality brands through iconic nameplates including Macy’s, Bloomingdale’s, and Bluemercury. Headquartered in New York City, its digital and nationwide footprint helps to deliver a seamless shopping experience for customers.

Analysts have taken their EPS expectations lower over recent months, a negative signal concerning near-term share performance.

Let’s take a closer look at what’s been impacting the company.

Macy’s Underperforms

Macy’s shares have struggled year-to-date, down 25% and widely underperforming relative to the S&P 500. Quarterly releases throughout the year so far haven’t been met with much positivity despite the company exceeding our consensus EPS estimates in back-to-back releases.

Sales of $4.8 billion fell 4.1% YoY throughout its latest period, with comparable store sales down 2.0% on an owned basis and down 1.2% on an owned-plus-licensed-plus-marketplace basis. While the decrease in comparable store sales is certainly notable, it’s critical to note that the figures did exceed prior guidance, reflecting a level of positivity.

The gross margin for the period came in flat relative to the year-ago period as well, another added positive moving forward given its recent stretch of crunched profits. Below is a chart illustrating the company's sales on a quarterly basis. 

Bottom Line

Negative earnings estimate revisions paint a challenging picture for the company’s shares in the near term.

Macy’s M is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, the best idea would be to focus on stocks with a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy) – these stocks sport a notably stronger earnings outlook paired with the potential to deliver explosive gains in the near term.

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This article originally published on Zacks Investment Research (zacks.com).

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