DJ Macy's Reports Earnings Tomorrow. Here's What to Expect. -- Barrons.com
By Teresa Rivas
Macy's stock has tumbled 59% this year, as the pandemic keeps shoppers away from malls. Wall Street doesn't have high expectations for the company's fiscal second-quarter earnings report, due out Wednesday.
Macy's (ticker: M) reported an in-line fiscal first quarter in July, but the company warned that Covid-19 cases were keeping consumers at home, especially in hard-hit states. It isn't alone in dealing with lower traffic, but the coronavirus crisis has hit department stores especially hard. Kohl's (KSS) and Nordstrom (JWN) both saw their shares fall after reporting earnings in recent weeks.
Macy's stock is down 59% year to date, while the S&P 500 is up 8%.
Macy's also said it might not return to prepandemic levels of profitability until late 2021 or 2022. Indeed, patience probably will be necessary, given the state of the economic recovery and the toll on consumers.
While Macy's and other department stores are selling more goods online, e-commerce hasn't been able to make up for closed stores -- especially for a company such as Macy's that depends heavily on tourist sales at locations such as its flagship Herald Square store in New York City. Even strong retailers are struggling with store closures.
The problems facing Macy's and its peers predate the pandemic. Department stores have been losing market share to online and specialty retailers for years. They have been hurt by the long-term decline in traffic to many malls, and more brands are striking out on their own. The company has been cutting costs, but just meeting lowered expectations isn't always enough to help the stock.
Of 16 analysts tracked by FactSet, there is only one Buy rating on Macy's. Half rate it at Hold or the equivalent, and 44% are bearish. The average analyst price target is $5.79, just over a dollar below where the shares have been trading.
For the quarter, analysts are predicting Macy's will report a loss of $1.77 a share on revenue of $3.5 billion. That compares with a $2.03 per-share loss and revenue of $3.02 billion in the prior quarter.
That said, much like last quarter, investors will probably be more interested in Macy's outlook. If it can deliver less-bad news, it could see a bounce, although that eluded its department store peers this quarter.
Macy's scheduled a conference call for 8 a.m. Eastern time on Tuesday.
Write to Teresa Rivas at teresa.rivas@barrons.com
(END) Dow Jones Newswires
September 01, 2020 07:29 ET (11:29 GMT)
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