Macy's, Inc. (M)

Testing out a portfolio of stocks rated outperform that are characterized by having one letter ticker symbols.

A partial replay of last year. The stock will likely fall as sales do not meet expectations. The S&P 500 will probably be supported by mutual fund managers trying to beautify their holdings prior to their year end report. So M will likely fall relative to the S&P 500 within this next year.
Adding to the stress on retailers is the realization that the unemployment rate is unlikely to come down any time soon and is more likely to keep rising until the administration changes its policies to help small businesses.

- The stock has almost tripled since March 5th
- Tired stores in need of refurbishment
- Way too much debt on the balance sheet
- Mis-positioned...they try to be both luxury and value, and come off as neither
- Initial target is $10

Federated Department Stores Inc is into the business of operating retail stores, with its flagship chain of stores being Bloomingdale’s and Macy’s, along with an assortment of other small brands. The company also operates a couple of subsidiaries to support its BackOffice functions. The company completed the acquisition of May brand of department stores with which it increased its presence to 868 retail stores in 45 states and district Columbia in the US and Puerto rico. This made Federated the fourth largest retailer in the US.

The industry is highly competitive with players like Kohl, Wal-Mart and J.C.Penney.The major drivers in this sector are new store opening and comparable store sales. Also customer spending plays a big role. With this industry scenario, the sales volume of the company is also picking up with both Macy’s and Bloomingdale’s contributing strongly to the bottom layer. Healthy increase in the comparable store sale performance over the last two years and strong penetration of private labels has reflected in good earnings growth.

Major revenue segments for the company is its Macy and Bloomingdale range of stores. The format of May line of stores is different from company’s standard format, and thus, an exercise is undertaken to upgrade it to the Macy’s format. These renovated stores are expected to bring sales in the range of Macy’s. The renovated May stores were re-opened in September and the response was good. The company expects the revenue to pick up over the months and reach a stable level. Thus, we expect the price of stock to go up in 2007.

Read an interesting stat and that is the equal to 2% GDP was borrowed; this we have the current market rally masking that the slow-down is hard! Interesting both 87' and 1929 had this style of borrowing fueling an optimistic picture of Americas future, in the face of coming bad times. Major correction and the reality that the baby boomers are broke, will set in. Believe we are about to repeat the 70's or worse, Dems in power,hate President Bush; Nixon, Vietnam, triple digit Carter style inflation. People are going to shop and layout tons of cash on formal wedding wear, not!!!!!!!!!!!!

I would love for this chain, with all its history, to survive. Problem is, the Macy's component has downsizing practically written into its formula: it has 850 stores but still needs to rationalize some out from those four-anchor malls that now have two (even more!) Macy's on site owing to the assimilation of the May Co. presence (incl. Hecht's, Filene's, Robinson-May and Foley's). Macy's can't make a furniture gallery out of everything!

Sociologically, I feel as if Macy's failure continues, it will offer continued proof of the schism between upper-middle dept. stores like Nordstrom and the company's own Bloomingale's, and lower-middle like Kohl's or JCPenney. But the customers are staying away in droves. This seems to be especially true in Chicagoland, where many potential customers of Macy's are still p.o.'ed because it supplanted Marshall Field's (which, had it been adequately supported, might still be around, yes?).

The stats do not look good, the company's advertising is pretty anemic compared to Target or Penney's, and I see no particular reason for growth. At a P/E of over 24, the only element of the corporation I still feel warm toward is Bloomingdale's. If it comes to that, let us not hope Macy's will drag Bloomie's down with it.

Will be a victim of the US credit crunch.

Retailers haven't taken the full brunt of the failed holiday selling season yet.

I am banning my wife from the shopping malls and Macy's until the economy shows that it is not further deteriorating!

It will be interesting to see what happens to sales volume when Macy's tries to raise prices back to their standard retail price levels. When those numbers come out, I'll probably be harvesting major CAPS points.

Bringing in some star power downsizing an realigning their approach in operations nationwide puts Macy's in a spot to hold on and once again regain their upper crust authority. Their marketing audience is typically a little more insulated from economic change.

Moody's downgraded Macy's debt to Ba2 for good reason. As of fiscal y/e 2009, cash and receivables totaled $1.7B while ST debt was $966. Cash from operations dropped 50% the last 2 years, with a LT debt load of $8.733B. To add insult to injury, inventory levels have barely budged in 3 years indicating management's inability to gauge demand. Oh yes, things are so good Macy's coughed up $15m in compensation to it's CEO in 2008.

Wait and see

Take over of Foleys and name change made some people mad, but they will be back. Some malls now have 2 macys. Problem? Best solution is to split store to Men and Women. Keep competition out of the mall. Consumers are already in acceptance, so its up to them how they handle it. Smart money says they know what they're doing. Hollidays will tell. Good move for FD.

Macy's will not survive with the added stores of Hechts and will reorganize under Chapter 11 soon, unless new management can be put in place for immediate turnaround.

Macys will feel the pinch from this downturn. It's already down and it will go down to $8-9 share. I used to shop their once a month. Now its more like once every 2 months and when I go into the store there are less and less people shopping in there.

Copy cat wantingthe lead

GOOD STOCK

stable, good products...