Guggenheim analyst Robert Drbul has reiterated their neutral stance on M stock, giving a Hold rating today.
Robert Drbul has given his Hold rating due to a combination of factors surrounding Macy’s current performance and strategic plan for the near future. Drbul acknowledges the company’s recent initiative “A Bold New Chapter,” which aims to stimulate growth and modernize operations. This includes closing approximately 150 underperforming stores, expanding luxury locations, and monetizing assets. While these efforts are projected to save costs in the long run, with an expectation of around $235 million annual savings by 2026, there is still uncertainty about the initiative’s short-term impact on performance.
Moreover, Drbul notes that Macy’s fourth-quarter sales have dipped slightly below expectations, and comparable store sales have also declined. However, the company has seen a robust expansion in gross margin, largely due to a disciplined approach to markdowns and clearance and reduced delivery expenses. Despite these positive aspects, the forecast for the fiscal year 2024 is cautious, as it is seen as a transitional period with investments that are likely to precede growth in 2025. This conservative outlook, combined with the anticipation of the restructuring plan’s effects materializing in 2025, supports the Neutral or Hold rating.
According to TipRanks, Drbul is a 5-star analyst with an average return of 8.4% and a 59.88% success rate. Drbul covers the Consumer Cyclical sector, focusing on stocks such as Levi Strauss & Co, Columbia Sportswear, and Foot Locker.
In another report released today, CFRA also downgraded the stock to a Hold with a $18.00 price target.
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Macy’s (M) Company Description:
Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. Its brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland Hussey Macy Sr. on March 6, 1929 and is headquartered in Cincinnati, OH.
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