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Two Stores in the Cards for Macy's

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Macy’s Inc.’s (M - Free Report) store expansion plans include opening of two stores in the Las Vegas market, one being a two-level, 180,000 square feet full-line store in fall 2014 in the upcoming shopping complex, Shops at Summerlin, and another two-level, 105,000 square feet dedicated Men’s Store in spring 2013 in the Fashion Show Mall. These will bring the total store count to seven in Las Vegas.

At present, Macy’s operates a full-line outlet with a store size of 201,000 square feet in the Fashion Show Mall, and employs 495 associates. Once the men’s store is developed, the current store will be refurbished by fall 2013 to enhance the women’s collection, including handbags, shoes and jewelry. With two operational stores, the workforce is expected to be strengthened to 560.

Macy’s departmental stores sell a wide range of merchandise. Its products include men’s, women’s, and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods.

In an attempt to increase sales, profitability and cash flow, the company has been taking steps such as integration of operations, consolidation of divisions, customer-centric localization initiatives, as well as developing e-commerce business and online order fulfillment centers. Moreover, Macy’s continues to focus on price optimization, inventory management and merchandise planning to drive traffic.

The U.S. economy is yet to recover. Amid such a scenario, Macy’s has been moving on an upbeat note. The company’s sound fundamentals across its Macy’s and Bloomingdale’s business, is mirrored through strong second quarter results and management believes that it will sustain the rhythm in 2012, as the year presents enormous opportunity for enhancing market share.

The second-quarter 2012 earnings of 67 cents a share beat the Zacks Consensus Estimate of 64 cents, and soared 22% from 55 cents earned in the prior-year quarter on the back of My Macy's localization initiatives, omnichannel integration, robust online sales and effective cost management.

The Cincinnati, Ohio-based company reported total sales growth of 3% to $6,118 million in the quarter from $5,939 million in the year-ago period, and comfortably surpassed the Zacks Consensus Estimate of $6,100 million. Comparable-store sales for the quarter climbed 3%. Online sales, including sales from and, continued to show growth momentum. For the quarter, online sales were up 36.1%.

Macy’s, which competes with J. C. Penney Company Inc. (JCP - Free Report) , Dillard’s Inc. (DDS - Free Report) and Saks Incorporated , currently operates approximately 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico. The company also operates 11 Bloomingdale’s locations.

Currently, we have a long-term Neutral recommendation on the stock. However, Macy’s holds a Zacks #2 Rank that translates into a short-term Buy rating, and well defines the company’s relentless endeavors to keep itself on the growth trajectory in an economy, which is still lackluster.

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