Macy’s financial performance in its most recent quarter failed to impress. Anticipating continued weakness, management lowered its full-year sales and earnings outlook, discouraging investors.
In the third quarter, Macy’s revenue stayed low and fell 4.3% YoY (year-over-year) to $5.2 billion, missing analysts’ estimate. A 3.5% decline in same-store sales (owned plus licensed) hurt its revenue.
Macy’s adjusted EPS plunged 74.1% YoY to $0.07 but came ahead of Wall Street’s forecast. The company blamed unfavorable weather, lower tourist spending, and e-commerce tech issues for its dismal show. Macy’s now expects net sales to decline by 2.0%–2.5% this year, whereas it had previously forecast flat net sales. It now foresees its 2019 same-store sales (owned plus licensed) falling 1%–1.5%, down from its earlier guidance of flat-to-1.0% growth. The company has reduced its 2019 adjusted EPS forecast to $2.57–$2.77 from $2.85–$3.05.
We think the US dollar strengthening could affect tourist spending, and in turn, Macy’s top-line growth. Increased competition and promotions could continue to drag it down. Wall Street’s target price of $15.43 for Macy’s stock aligns with its November 27 price, implying no upside for the stock.
View more information: https://marketrealist.com/2019/11/should-investors-consider-macys-for-its-dividend-yield/