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Omnichannel, Cost Containment Key to Macy's (M) Q2 Earnings
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Macy's, Inc. (M - Free Report) is scheduled to report second-quarter fiscal 2018 results on Aug 15, before the opening bell. In the last reported quarter, this department store retailer delivered a positive earnings surprise of 33.3%. The company’s bottom-line has also outperformed the Zacks Consensus Estimate by an average of 16.5% in the trailing four quarters.
How Are Estimates Faring?
The Zacks Consensus Estimate for the quarter under review is pegged at 48 cents, which is in line with the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in 30 days. Analysts polled by Zacks now project revenues of $5,591 million, reflecting year-over-year increase of roughly 1%. In the last reported quarter, the company registered top-line growth of 3.6%.
Factors at Play
Macy’s strategic investments across stores, technology and merchandising are likely to cushion comparable sales. The company has also announced slew of measures revolving around store closures, cost containment, real estate strategy and investment in omnichannel capabilities to improve performance. Moreover, we believe that focus on private label brands will help augment margins.
Management is developing e-commerce business, Macy’s Backstage off-price business along with expanding Bluemercury and online order fulfillment centers. The company has added a new feature to its mobile app called Mobile Checkout, which allows customers to scan bar codes of items and pay via smartphones.
These initiatives are seen as part of the company’s endeavor to better withstand competitive pressure from both brick-and-mortar discount stores and online retailers, such as Amazon (AMZN). Although comparable sales did increase in the last reported quarter, analysts remain concerned about the performance of the same.
Due to the shift of the Friends and Family event into the first quarter, comparable sales performance in the second quarter is likely to be subdued. Friends and Family event favorably impacted first-quarter comparable sales results by approximately 250 basis points.
Our proven model shows that Macy’s is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Macy’s has a Zacks Rank #2 and an Earnings ESP of +0.21%. This makes us reasonably confident of an earnings beat.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
The TJX Companies, Inc. (TJX - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2.
Nordstrom, Inc. (JWN - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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Omnichannel, Cost Containment Key to Macy's (M) Q2 Earnings
Macy's, Inc. (M - Free Report) is scheduled to report second-quarter fiscal 2018 results on Aug 15, before the opening bell. In the last reported quarter, this department store retailer delivered a positive earnings surprise of 33.3%. The company’s bottom-line has also outperformed the Zacks Consensus Estimate by an average of 16.5% in the trailing four quarters.
How Are Estimates Faring?
The Zacks Consensus Estimate for the quarter under review is pegged at 48 cents, which is in line with the year-ago quarter. We note that the Zacks Consensus Estimate has been stable in 30 days. Analysts polled by Zacks now project revenues of $5,591 million, reflecting year-over-year increase of roughly 1%. In the last reported quarter, the company registered top-line growth of 3.6%.
Factors at Play
Macy’s strategic investments across stores, technology and merchandising are likely to cushion comparable sales. The company has also announced slew of measures revolving around store closures, cost containment, real estate strategy and investment in omnichannel capabilities to improve performance. Moreover, we believe that focus on private label brands will help augment margins.
Management is developing e-commerce business, Macy’s Backstage off-price business along with expanding Bluemercury and online order fulfillment centers. The company has added a new feature to its mobile app called Mobile Checkout, which allows customers to scan bar codes of items and pay via smartphones.
These initiatives are seen as part of the company’s endeavor to better withstand competitive pressure from both brick-and-mortar discount stores and online retailers, such as Amazon (AMZN). Although comparable sales did increase in the last reported quarter, analysts remain concerned about the performance of the same.
Due to the shift of the Friends and Family event into the first quarter, comparable sales performance in the second quarter is likely to be subdued. Friends and Family event favorably impacted first-quarter comparable sales results by approximately 250 basis points.
Macy's, Inc. Price, Consensus and EPS Surprise
Macy's, Inc. Price, Consensus and EPS Surprise | Macy's, Inc. Quote
What the Zacks Model Unveils
Our proven model shows that Macy’s is likely to beat earnings estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Macy’s has a Zacks Rank #2 and an Earnings ESP of +0.21%. This makes us reasonably confident of an earnings beat.
Other Stocks With Favorable Combination
Here are some other companies you may want to consider as our model shows that these too have the right combination of elements to post an earnings beat:
Ross Stores, Inc. (ROST - Free Report) has an Earnings ESP of +2.72% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The TJX Companies, Inc. (TJX - Free Report) has an Earnings ESP of +1.04% and a Zacks Rank #2.
Nordstrom, Inc. (JWN - Free Report) has an Earnings ESP of +0.75% and a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>