Macy's, Inc. (M) | Investment Case

1. Company Snapshot

1.a. Company Description

Macy's, Inc., an omni-channel retail organization, operates stores, Websites, and mobile applications.The company sells a range of merchandise, such as apparel and accessories for men, women, and children; cosmetics; home furnishings; and other consumer goods.As of January 29, 2022, it operated 725 department stores in the District of Columbia, Puerto Rico, and Guam under the Macy's, Macy's Backstage, Market by Macy's, Bloomingdale's, Bloomingdale's The Outlet, Bloomies, and bluemercury brands.

It also operates in Dubai, the United Arab Emirates, and Al Zahra, Kuwait under the license agreements.The company also operates as a beauty products and spa retailer.The company was formerly known as Federated Department Stores, Inc.

and changed its name to Macy's, Inc.in June 2007.Macy's, Inc.

was founded in 1830 and is based in New York, New York.

Show Full description

1.b. Last Insights on M

Macy's recent performance was driven by better-than-expected Q2 earnings, with management crediting store renovations and strategic shifts for improved sales trends. The company's robust fundamentals, including a huge capital buffer, ensure sustainability of its operating capacity and dividends. A well-diversified business model makes Macy's resilient against macroeconomic uncertainty. Additionally, AXQ Capital LP increased its stake in Macy's by 91.7%, signaling confidence in the company's turnaround. Macy's Q3 earnings report is upcoming, with investors watching for sustained growth.

1.c. Company Highlights

Last Price	22.85
Change Percentage	2.37%
Open	22.5
Previous Close	22.32
Market Cap ( Millions)	6055
Volume	7770804
Year High	23.27
Year Low	9.76
M A 50	19.37
M A 200	14.54

FCF Yield	17.94%
Dividend Yield	3.15%
ROE	10.75%
Debt / Equity	121.14%
Net Debt / EBIDTA	296.42%
Price To Book	1.41
Price Earnings Ratio	12.81
Price To FCF	5.57
Price To sales	0.27
EV / EBITDA	6.71

2. Macy's Q2 Earnings: A Strong Beat on EPS and Revenue Growth

Macy's reported a strong Q2, with adjusted EPS of $0.41, significantly beating estimates of $0.19. Revenue came in at $5 billion, with net sales of $4.8 billion, down 2.5% due to store closures. The company's gross margin was 39.7%, and inventory was down 0.8%. The beat on EPS was driven by sales growth and cost controls, with the company achieving $393 million in adjusted EBITDA, or 7.9% of revenue.

Publication Date: Sep -07

                                    📋 Highlights
                                    Exceeded Guidance with Strong EPS:
                                                Adjusted EPS was $0.41, surpassing the guided range of $0.15–$0.20 due to sales growth and cost controls.
Brand-Specific Sales Momentum:
                                                Bloomingdale’s achieved 5.7% comp growth (fourth consecutive quarter), while Bluemercury posted 1.2% comp growth (18th consecutive gain).
Inventory and Debt Reduction:
                                                Inventory fell 0.8%, and debt maturities were extended through 2030, reducing leverage to 1.6x EBITDA.
Strategic Store Closures:
                                                64 store closures impacted Q2 net sales (-2.5%), but excluded closures, revenue rose 0.9% with stronger omnichannel performance.
Revised Tariff Impact Guidance:
                                                Tariffs now expected to reduce gross margin by 40–60 bps (vs. prior 20–40 bps), potentially affecting full-year EPS by $0.25–$0.40.

                                

Segment Performance

The company's brands performed well, with Macy's nameplate delivering 1.2% comp sales growth, Bloomingdale's achieving 5.7% comp growth, and Bluemercury reporting its 18th consecutive quarter of comp sales growth. The strength in these brands was driven by omnichannel improvements, diversified product offerings, and customer sentiment, with Macy's achieving record net promoter scores.

Guidance and Tariff Impact

The company guided to full-year net sales of $21.15-$21.45 billion, with comp sales down 1.5% to up 0.5%. Tariffs are expected to reduce gross margin by 40-60 bps, up from prior guidance of 20-40 bps. The company is mitigating tariffs through vendor negotiations, diversifying sourcing, and selective pricing adjustments.

Valuation

With a P/E Ratio of 9.62, P/B Ratio of 0.31, and Dividend Yield of 4.11%, Macy's valuation suggests a relatively attractive profile. The company's ROE of 6.9% and Net Debt / EBITDA of 2.82 indicate a manageable debt position. As Tony Spring noted, "Our position is strong... We're remaining agile, iterating on assortments, experiences, and value." This strategic focus, combined with a reasonable valuation, positions Macy's for potential long-term growth.

3. NewsRoom

Macy's, Inc. (M) Hit a 52 Week High, Can the Run Continue?

Dec -04

Source: zacks.com

Myriad Uranium Completes Large-Scale Radiometric and Magnetic Geophysical Survey Across Its Copper Mountain Project

Dec -04

Source: newsfilecorp.com

Macy's Says Wealthier Shoppers Are Spending. It's Unclear That Will Last.

Dec -03

Source: investopedia.com

Macy's turnaround shows promise as sales climb to highest level in over 3 years

Dec -03

Source: foxbusiness.com

Macy's, Inc. (M) Q3 2026 Earnings Call Transcript

Dec -03

Source: seekingalpha.com

Crude Oil Gains 1%; Macy's Reports Strong Q3 Results

Dec -03

Source: benzinga.com

Macy's stock: is it egregiously overbought after Q3 earnings?

Dec -03

Source: invezz.com

Dow Jones Today: Stocks Turn Higher as Investors Downplay Private Payrolls Decline, Report Microsoft Cutting AI Software Sales Quotas

Dec -03

Source: investopedia.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.79%)

6. Segments

Women's Accessories, Shoes, Cosmetics, and Fragrances

Expected Growth: 4.78%

Macy's Inc. witnessed 4.78% growth in Women's Accessories, Shoes, Cosmetics, and Fragrances driven by increasing demand for premium and sustainable products, effective marketing strategies, and strategic partnerships. Additionally, the rise of e-commerce, influencer marketing, and experiential retail experiences contributed to the growth.

Men's and Kids'

Expected Growth: 4.83%

Macy's Men's and Kids' segment growth of 4.83% is driven by strategic initiatives such as Backstage off-price expansion, improved merchandise assortment, and enhanced omnichannel capabilities. Additionally, effective marketing campaigns and loyalty programs have contributed to increased customer engagement and retention.

Women's Apparel

Expected Growth: 4.78%

Macy's Women's Apparel segment growth of 4.78% is driven by increasing demand for trendy and affordable fashion, successful marketing campaigns targeting millennials, and strategic partnerships with popular brands. Additionally, the company's focus on omnichannel retailing, improved e-commerce platform, and enhanced in-store experiences are contributing to the growth.

Home/Other

Expected Growth: 4.77%

Macy's Home/Other segment growth of 4.77% is driven by increasing online sales, successful marketing campaigns, and strategic partnerships. Additionally, the company's focus on experiential retail, such as its 'Growth50' initiative, has enhanced customer engagement and driven sales. Furthermore, the segment's product diversification and private label offerings have also contributed to its growth.

7. Detailed Products

Apparel

Macy's offers a wide range of apparel for men, women, and kids, including casual and formal wear, outerwear, and activewear from various brands and private labels.

Home Goods

Macy's sells a variety of home goods, including bedding, kitchenware, dining, and decorative items from popular brands and private labels.

Beauty and Fragrances

Macy's offers a wide range of beauty and fragrance products from popular brands, including skincare, makeup, and perfumes.

Shoes

Macy's sells a vast selection of shoes for men, women, and kids, including boots, sandals, sneakers, and dress shoes from various brands.

Jewelry

Macy's offers a wide range of fine and fashion jewelry, including diamonds, gold, silver, and gemstones from popular brands.

Kitchen and Dining

Macy's sells a variety of kitchen and dining products, including cookware, cutlery, and tableware from popular brands.

Bed and Bath

Macy's offers a wide range of bed and bath products, including bedding, towels, and decorative items from popular brands.

Toys and Games

Macy's sells a variety of toys and games for kids, including educational toys, puzzles, and outdoor toys.

Services

Macy's offers various services, including gift wrapping, alterations, and personal shopping.

8. Macy's, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Macy's faces moderate threat from substitutes as customers have various alternatives for shopping, including online retailers like Amazon, eBay, and other department stores.

Bargaining Power Of Customers

Macy's customers have high bargaining power due to the availability of numerous alternatives, allowing them to easily switch to competitors if they are not satisfied with prices or services.

Bargaining Power Of Suppliers

Macy's has a large number of suppliers, which reduces the bargaining power of individual suppliers, giving Macy's more control over prices and negotiations.

Threat Of New Entrants

The threat of new entrants is low for Macy's due to the high barriers to entry in the retail industry, including significant capital requirements and established relationships with suppliers.

Intensity Of Rivalry

The retail industry is highly competitive, with many established players, leading to intense rivalry among companies like Macy's, Nordstrom, and Kohl's.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	44.79%
Debt Cost	3.95%
Equity Weight	55.21%
Equity Cost	14.89%
WACC	9.99%
Leverage	81.12%

11. Quality Control: Macy's, Inc. passed 2 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Dillard's

A-Score: 6.9/10

Value: 5.1

Growth: 6.9

Quality: 7.1

Yield: 8.0

Momentum: 9.5

Volatility: 5.0

1-Year Total Return ->

Travel + Leisure

A-Score: 6.6/10

Value: 8.0

Growth: 4.7

Quality: 6.0

Yield: 7.0

Momentum: 8.0

Volatility: 5.7

1-Year Total Return ->

Nordstrom

A-Score: 5.7/10

Value: 7.0

Growth: 3.8

Quality: 4.2

Yield: 5.0

Momentum: 6.0

Volatility: 8.3

1-Year Total Return ->

Allison Transmission Holdings

A-Score: 5.6/10

Value: 5.8

Growth: 7.4

Quality: 7.5

Yield: 2.0

Momentum: 3.0

Volatility: 8.0

1-Year Total Return ->

Macy's

A-Score: 5.3/10

Value: 8.1

Growth: 2.7

Quality: 4.3

Yield: 7.0

Momentum: 6.5

Volatility: 3.0

1-Year Total Return ->

Kohls

A-Score: 4.6/10

Value: 9.0

Growth: 2.4

Quality: 3.2

Yield: 9.0

Momentum: 2.5

Volatility: 1.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-3.21%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

9.99%

Macy's, Inc. - US55616P1049

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on M

1.c. Company Highlights

Higher Yield

Average Quality

Stable Momentum

Earnings Beats

Revenues Beats

Average Growth

Medium Volatility

Strong Momentum

Earnings Miss

Cheaper

Revenues Miss

Weak Momentum

Fairly Valued

Lower Growth

2. Macy's Q2 Earnings: A Strong Beat on EPS and Revenue Growth

Segment Performance

Guidance and Tariff Impact

Valuation

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.79%)

6. Segments

Women's Accessories, Shoes, Cosmetics, and Fragrances

Expected Growth: 4.78%

Men's and Kids'

Expected Growth: 4.83%

Women's Apparel

Expected Growth: 4.78%

Home/Other

Expected Growth: 4.77%

7. Detailed Products

Apparel

Home Goods

Beauty and Fragrances

Shoes

Jewelry

Kitchen and Dining

Bed and Bath

Toys and Games

Services

8. Macy's, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Macy's, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

22.85$

Current Price

22.85$

12.e Scoring ^Insights

12.f DCF ^BETA