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Macy's (M) Sharpens Edge: Expands Same-day Delivery Service

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Macy's, Inc. (M - Free Report) , which has introduced several innovative endeavors to combat competition, announced the expansion of its same-day delivery services to 15 more U.S. market starting this fall. Customers opting for same-day delivery services will have to shell out $8 to avail the service.

Macy’s previously had same-day delivery services in 18 markets and will now cover 33 markets. The 15 new markets includes Austin, TX; Charlotte, NC; Cincinnati; Columbus, OH; Denver; Grand Rapids, MI; Kansas City, MO; Minneapolis-St. Paul; Orlando, FL; Phoenix; Pittsburgh; Sacramento, CA; San Antonio, TX; San Diego, CA; and Tampa, FL. Bloomingdale’s will also cover two more markets — San Diego, CA and Orlando, FL.

Apart from same-day delivery services, the company had earlier also introduced various innovative services including Apple Pay, Enhanced Shopping Apps, Innovation in Stores Selling Technology, Macy’s Image Search, and Macy’s Wallet/Bloomingdale’s Wallet. The company’s “Buy Online Pickup in Store” initiative is also gaining traction.

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.

Restructuring Initiatives

This department store retailer recently announced the restructuring of 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.

Will the Stock Take U-Turn?

A glimpse of this Zacks Rank #3 (Hold) company’s share price movement reveals that it has plunged 37.4% in the past six months, wider than the industry’s decline of 23.6%. In contrast, the Zacks Retail-Wholesale Sector has advanced 9.5%.

We believe expansion of same-day delivery will help the company to be more competitive with respect to online retailer. Further, Analysts view the restructuring activity as a goal to streamline operations, make decision making process much simpler and manage inventory and pricing more efficiently These seem necessary to contain Macy’s waning top and bottom lines that have been hurting the stock.

Hot Stocks in the Retail Space Worth Checking Out

Investors interested in the retail space may consider 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%.

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