MACY’S INC. $60 (New York symbol M, Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 353.1 million; Market cap: $21.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 2.1%; TSINetwork Rating: Average; www.macysinc.com) operates 840 Macy’s and Bloomingdale’s department stores in 45 states.
The company is benefiting from its strategy of tailoring its merchandise to local tastes. It’s also doing a good job of blending its online business with its stores.
For example, shoppers can now buy goods on the company’s website and pick them up at any Macy’s location. The company has also brought in new radio frequency identification tags that help it keep track of merchandise and avoid product shortages.
In its fiscal 2015 second quarter, which ended August 2, 2014, Macy’s earned $292 million, up 3.9% from $281 million a year earlier. Per-share earnings gained 11.1%, to $0.80 from $0.72, on fewer shares outstanding.
Macy’s can still buy back up to $2.0 billion of shares under its current authorization. There are no time limits for these repurchases.
Sales gained 3.3%, to $6.3 billion from $6.1 billion, while same-store sales rose 3.4%.
The harsh winter depressed Macy’s sales in its fiscal 2015 first quarter. As a result, it now expects its same-store sales to rise 1.5% to 2.0% for the full year, down from its earlier prediction of 2.5% to 3.0%.
Even with the lower sales forecast, the company’s cost controls should still let it meet its full-year earnings target of $4.40 to $4.50 a share. The stock trades at 13.5 times the midpoint of that range. The $1.25 dividend yields 2.1%.
Macy’s is a buy.
