The wrath of winter is still rearing its angry head as many retailers start to report disappointing Q1 reports. However, it looks like Macy’s, Inc. (NYSE:M) might have survived the winter better than most.
Macy’s in the News
Macy’s, Inc. (NYSE:M) reported Q1 results on May 14, revealing $6.3 billion in revenue, down 1.7% from the same period last year. However, the company did report growing net income of $224 million, which beat Street estimates by $4.5 million. Macy’s CEO noted that sales were slow January through March, but “the trend improved in April when the weather began to turn in northern climate zones. We see this as a good sign moving forward into the second quarter.” The 85 year old company is also making strategic business moves by investment in e-commerce, as opposed to opening new brick and mortars, in order to keep up with the times.
Analyst Consensus Says BUY
Following the Q1 results, top analyst consensus is a moderate BUY on Macy’s, Inc. (NYSE:M). Many of these analysts believe that Macy’s has recovered well from the disruptive winter, and that the company is on track for a strong Q2.
Wells Fargo analyst Paul Lejuez maintained his BUY rating and a price target of $68, saying Q1 was “good enough”. Lejuez argued, “Macy’s posted EPS slightly above consensus, but comps declined. Management reiterated its annual guidance, and business has improved in April.” And, even though it was not a great quarter overall, Lejuez noted, “given the environment, the company managed the business well and we expect improvement in FQ2 given a shift in promotions, pent-up demand, and easier comparisons.” Lejuez has +7.0% average return per recommendation and a 67% success rate of recommendations.
Stifel Nicolaus analyst Richard Jaffe also reaffirmed his BUY Macy’s rating and $64 price target even though Macy’s Q1 EPS of $0.60 did not meet his $0.62 estimate. Jaffe pointed out that, “trends improved in April when the weather moderated, leading us to believe merchandise in stores is on-trend. We believe the company is well positioned entering 2Q. In our opinion, 1Q demonstrates M’s continued effective execution of its key strategies: My Macy’s, Inc. (NYSE:M), MAGIC selling, omnichannel initiatives, and merchandising improvements.” Jaffe has a +7.2% average return per recommendation and a 58% success rate of recommendations.
Before the Q1 numbers were released, there were still analysts who advised HOLD Macy’s, such as Nomura Holdings analyst Robert Drbul who has a 7.0% average return per recommendation and a 67% success rate of recommendations. However, now that the facts have been revealed, analysts are pleasantly surprised with Macy’s performance during the rough conditions, and think that there is hope that the company will continue to rebound into the next quarter.
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]