Citi analyst Paul Lejuez has maintained their neutral stance on M stock, giving a Hold rating today.
Paul Lejuez has given his Hold rating due to a combination of factors influencing Macy’s current performance and future prospects. The recent quarter showed weakness in same-store sales, which dropped by 5%, and management anticipates a continued sales decline in the upcoming quarter. Despite Macy’s effective inventory and expense management, the forecast for Fiscal Year 2024 suggests a further decline in EBIT margin, underscoring the difficulty of increasing margins amidst falling sales. However, Lejuez acknowledges Macy’s strategic initiative to close and monetize 150 stores over the next three years, which could be seen as a positive step toward optimizing the company’s retail footprint.
The potential real estate monetization from these store closures, estimated to yield between $500-650 million, presents a dichotomy between bullish and bearish perspectives. While bears might find the proceeds modest relative to the company’s enterprise value, bulls could argue that since these stores are less productive, the move indicates a higher value for the remaining portfolio. Lejuez is inclined to take a more positive view on the real estate aspect but remains neutral overall. He notes that the current stock price already reflects the management’s three-year plan, and with no significant catalysts on the horizon and ongoing secular challenges, there lacks an immediate reason to be more optimistic about the stock.
According to TipRanks, Lejuez is a 5-star analyst with an average return of 10.2% and a 60.05% success rate. Lejuez covers the Consumer Cyclical sector, focusing on stocks such as Costco, Macy’s, and Deckers Outdoor.
In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $20.00 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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