We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Macy's Restructuring Plan Help Lift Stock Performance?
Read MoreHide Full Article
The retail landscape has been undergoing a fundamental change. With digital transformation in shopping and consumers splurging online, store and mall traffic has been hit hard. As a result, most retailers, including big-box, are struggling to compete with e-commerce channels and are being forced to trim store count to focus more on an online model. Macy's, Inc. (M - Free Report) is not fully immune to these retail headwinds and therefore leaving no stone unturned to be back on growth trajectory.
This department store retailer announced the restructuring of its merchandising operations that includes combining of merchandising, planning and private brands divisions into one segment. Management cautioned that the restructuring is likely to result in the loss of 100 jobs.
As part of the restructuring, the company would incur one-time costs of approximately $20-$25 million in the third quarter of fiscal 2017. However, management expects to save about $30 million on an annual basis. The company anticipates saving about $5 million or approximately 1 cent a share in the final quarter.
In another move, Hal Lawton has been appointed as president of Macy’s, effective Sep 8, 2017. Lawton who previously served as the senior vice president in eBay North America, will directly report to the company’s CEO Jeff Gennette. At Macy’s, Lawton will be handling merchandising, stores, operations, technology, along with consumer insights and analytics.
Will Aforementioned Moves Pull Stock Out of Doldrums?
Analysts view this restructuring activity as a goal to streamline operations, make decision making process much simpler and manage inventory and pricing more efficiently. Further, analysts believe that with Lawton on board the company expects to take its omnichannel business to next level with better integration of technology and brick-and-mortar stores. These seem necessary to contain Macy’s waning top and bottom lines that have been hurting the stock.
A glimpse of this Zacks Rank #3 (Hold) company’s share price movement reveals that it has plunged 39.8% in the past six months compared with the industry’s decline of 27.7%. In contrast, the Zacks Retail-Wholesale sector has advanced 8.4%.
A look at the company’s performance in fiscal 2016 unveils that net sales declined 7.4%, 3.9%, 4.2% and 4% in the first, second, third and fourth quarters, while earnings per share plunged 28.6%, 15.6%, 69.6% and 3.3% during the respective quarters. During the first and second quarters of fiscal 2017 the scenario was no different, as net sales declined 7.5% and 5.4%, while earnings per share fell 40% and 11.1%, respectively.
Further, management had warned investors that its margins may continue to feel the pinch of tough retail scenario. Macy’s now envisions fiscal 2017 gross margin to contract 50-70 basis points.
Nevertheless, Macy’s has announced a slew of measures revolving around stores closures, cost containment, real estate strategy and investment in omnichannel capabilities to enhance sales, profitability and cash flows. Additionally, management is developing e-commerce business, Macy’s Backstage off-price business along with expanding Bluemercury and online order fulfillment centers.
Like to Know Hot Stocks in the Retail Space, Check These
Gap delivered an average positive earnings surprise of 9.3% in the trailing four quarters and has a long-term earnings growth rate of 8%.
The Children's Place delivered an average positive earnings surprise of 16.3% in the trailing four quarters and has a long-term earnings growth rate of 9%.
Gildan Activewear delivered an average positive earnings surprise of 5.5% in the trailing four quarters and has a long-term earnings growth rate of 13.5%.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Image: Bigstock
Will Macy's Restructuring Plan Help Lift Stock Performance?
The retail landscape has been undergoing a fundamental change. With digital transformation in shopping and consumers splurging online, store and mall traffic has been hit hard. As a result, most retailers, including big-box, are struggling to compete with e-commerce channels and are being forced to trim store count to focus more on an online model. Macy's, Inc. (M - Free Report) is not fully immune to these retail headwinds and therefore leaving no stone unturned to be back on growth trajectory.
This department store retailer announced the restructuring of its merchandising operations that includes combining of merchandising, planning and private brands divisions into one segment. Management cautioned that the restructuring is likely to result in the loss of 100 jobs.
As part of the restructuring, the company would incur one-time costs of approximately $20-$25 million in the third quarter of fiscal 2017. However, management expects to save about $30 million on an annual basis. The company anticipates saving about $5 million or approximately 1 cent a share in the final quarter.
In another move, Hal Lawton has been appointed as president of Macy’s, effective Sep 8, 2017. Lawton who previously served as the senior vice president in eBay North America, will directly report to the company’s CEO Jeff Gennette. At Macy’s, Lawton will be handling merchandising, stores, operations, technology, along with consumer insights and analytics.
Will Aforementioned Moves Pull Stock Out of Doldrums?
Analysts view this restructuring activity as a goal to streamline operations, make decision making process much simpler and manage inventory and pricing more efficiently. Further, analysts believe that with Lawton on board the company expects to take its omnichannel business to next level with better integration of technology and brick-and-mortar stores. These seem necessary to contain Macy’s waning top and bottom lines that have been hurting the stock.
A glimpse of this Zacks Rank #3 (Hold) company’s share price movement reveals that it has plunged 39.8% in the past six months compared with the industry’s decline of 27.7%. In contrast, the Zacks Retail-Wholesale sector has advanced 8.4%.
A look at the company’s performance in fiscal 2016 unveils that net sales declined 7.4%, 3.9%, 4.2% and 4% in the first, second, third and fourth quarters, while earnings per share plunged 28.6%, 15.6%, 69.6% and 3.3% during the respective quarters. During the first and second quarters of fiscal 2017 the scenario was no different, as net sales declined 7.5% and 5.4%, while earnings per share fell 40% and 11.1%, respectively.
Further, management had warned investors that its margins may continue to feel the pinch of tough retail scenario. Macy’s now envisions fiscal 2017 gross margin to contract 50-70 basis points.
Nevertheless, Macy’s has announced a slew of measures revolving around stores closures, cost containment, real estate strategy and investment in omnichannel capabilities to enhance sales, profitability and cash flows. Additionally, management is developing e-commerce business, Macy’s Backstage off-price business along with expanding Bluemercury and online order fulfillment centers.
Like to Know Hot Stocks in the Retail Space, Check These
Investors interested in the retail space may consider some better-ranked stocks such as The Gap, Inc. (GPS - Free Report) , The Children's Place, Inc. (PLCE - Free Report) and Gildan Activewear Inc. (GIL - Free Report) . These stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gap delivered an average positive earnings surprise of 9.3% in the trailing four quarters and has a long-term earnings growth rate of 8%.
The Children's Place delivered an average positive earnings surprise of 16.3% in the trailing four quarters and has a long-term earnings growth rate of 9%.
Gildan Activewear delivered an average positive earnings surprise of 5.5% in the trailing four quarters and has a long-term earnings growth rate of 13.5%.
Zacks' 10-Minute Stock-Picking Secret
Since 1988, the Zacks system has more than doubled the S&P 500 with an average gain of +25% per year. With compounding, rebalancing, and exclusive of fees, it can turn thousands into millions of dollars.
But here's something even more remarkable: You can master this proven system without going to a single class or seminar. And then you can apply it to your portfolio in as little as 10 minutes a month.
Learn the secret >>