MACY’S INC. $44 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 377.9 million; Market cap: $16.6 billion; Price-to-sales ratio: 0.6; Dividend yield: 2.3%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states.
The company continues to benefit from strong online sales. That’s largely because it is offering free shipping and letting customers pick up their orders at its stores. Macy’s recent move to tailor its merchandise to local tastes is also helping it compete.
Even so, Macy’s sales fell 0.8% in the second quarter of its 2014 fiscal year, which ended August 3, 2013, to $6.07 billion from $6.12 billion a year earlier. Same-store sales, which include online orders, also declined 0.8%.
Earnings rose 0.7%, to $281 million from $279 million. Pershare earnings rose 7.5%, to $0.72 from $0.67, on fewer shares outstanding.
Due to slowing consumer spending, the company now expects its same-store sales to rise 2% to 2.9% for all of fiscal 2014. That’s down from its earlier prediction of a 3.5% rise.
Macy’s also cut its 2014 earnings forecast to $3.80 to $3.90 a share from $3.90 to $3.95. The stock trades at 11.4 times the midpoint of the new range. The $1.00-a-share dividend yields 2.3%.
In the longer term, Macy’s earnings should benefit from its expansion to support its growing online operations. These moves include expanding a warehouse in Arizona and installing terminals that let customers place orders for merchandise they can’t find on the shelves.
Macy’s is a buy.
