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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Blowout Q2 Provides Confidence in No-Moat Macy’s Polaris Strategy; Shares Fairly Valued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

No-moat Macy’s Polaris plan appears to be working as the firm crushed sales and earnings estimates in 2021’s second quarter and raised full-year guidance. We expect to lift our per share fair value estimate of $18.70 by a high-single-digit percentage, although we view Macy’s as fully valued after its share price soared by a mid-teens percentage on the news. While Macy’s results are encouraging, the retail environment has been unusually favorable (as evidenced by similarly strong results from no-moat Kohl’s), so we are reluctant to judge Macy’s turnaround as complete and still believe it lacks a sustainable competitive advantage.

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Company Profile

Business Description

Founded in 1858, Macy’s operates nearly 600 stores under the Macy’s brand, 56 stores under the Bloomingdale’s brand, and about 160 freestanding Bluemercury specialty beauty stores. Macy’s also operates e-commerce sites, owns 65% of a Chinese e-commerce joint venture, and licenses two Bloomingdale’s stores in the United Arab Emirates and Kuwait. Women’s apparel, accessories, shoes, cosmetics, and fragrances constituted 58% of Macy’s 2020 sales. The retailer recently consolidated its headquarters in New York City.

Contact
151 West 34th Street
New York, NY, 10001
T +1 513 579-7780
Sector Consumer Cyclical
Industry Department Stores
Most Recent Earnings Jul 31, 2021
Fiscal Year End Jan 29, 2022
Stock Type Distressed
Employees 75,711

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