* Reports profit Q1 2019 Wednesday 15 May before the bell
* EPS consensus: $ 0.33
* Revenue expectation: $ 5.52 billion
Macy & # 39; s Inc (NYSE 🙂 will have to do something spectacular to reverse the damage that the slower sales caused to its stock price. But there is little chance that the department store chain will show the turnaround it needs when it reports its reports tomorrow before the market opens.
At the beginning of this year, the retailer shocked investors by shortening full-year earnings expectations, citing weakening sales in categories such as women's clothing, fashion jewelry and cosmetics. That disappointment came in the middle of one of the best growth periods for other retailers because they benefited from the strength of the US economy and robust consumer spending.
If Macy & # 39; s could not take advantage of this generally working environment for retailers, there is little hope that it could make things work if the economy loses its steam. The escalating trade war with China is also likely to increase pressure on costs and damage consumer sentiment.
This concern has kept investors on the sidelines and badly damaged Macy & # 39; s shares this year. The stock, which closed 3.9% on $ 21.58 on Monday, has fallen in 10 of the last 12 trading sessions. It has fallen by 28% this year and has lost about half the value of the peak reached last summer.
For the quarter that ended in March, analysts expect earnings per share to fall to $ 0.33 compared to $ 0.48 a year ago. Sales are likely to be nearly $ 5.52 billion, according to the analysts' average estimate
Two metrics key to Macy & # 39; s rebound
Jeffrey Gennette, CEO of Macy, has tried different formats in his store stories to try to win back customers and survive in the midst of the e-commerce attack that has threatened the traditional physical model of retailing
Macy & # 39; s has invested heavily in increasing its digital presence by adding more local merchandise and refreshing in-store fixtures. That strategy has promoted online sales. The retailer expects more than $ 1 billion in online sales this year. Macy's customers find its online platform – with which customers can check prices in the app, keep track of order history, perform visual product searches and also chat with customer representatives – very useful.
In addition to online success, Macy & # 39; s also reduces costs and it is expected that retailers will publish a savings target for the next three to five years later this year. Nevertheless, in the longer term, Macy has to show that the cost savings, new expenditures and redesign of stores reinvigorate actual sales.
Traffic on stores and revenue growth are the crucial measures at the moment, and will be the numbers that investors follow most closely when the company releases its profit report
Bottom Line
We do not see Macy & # 39; s shares recover in 2019, even after the massive sell-off in the past six months. Due to the company's uneven path to recovery, it is not logical to bet on this store's stock this year. We think investors would be better off on the sidelines and waiting to see how the current reversal efforts are taking place.
