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TPG-Axon Capital Management Drops Its Position in Macy’s

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TPG-Axon exits Macy’s

TPG-Axon dropped its position in Macy’s (M) by selling its entire stake of 2,003,586 shares in the company. Macy’s is part of the Consumer Discretionary Select Sector SPDR Fund (XLY) and the iShares US Consumer Services ETF (IYC), with exposures of 0.96% and 0.76%, respectively.

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Acquisition of Bluemercury

In March 2015, Macy’s completed the acquisition of Bluemercury for $210 million. Bluemercury is recognized widely as the fastest-growing and largest retailer for spa services and luxury beauty products in America. Bluemercury, Macy’s first acquisition in the past decade, is expected to offer the company a completely new growth channel.

As per the company’s 2014 annual report, “Macy’s plans to operate and significantly expand Bluemercury stand-alone specialty stores, enhance its online capabilities and add Bluemercury private brand products and shops to selected Macy’s stores over time.”

Macy’s to shut down several stores

As per US Department of Commerce statistics presented in its 4Q14 retail e-commerce sales report dated February 17, 2015, total retail sales in the US witnessed a growth of 3.7% in 4Q14 compared to 4Q13. However, e-commerce sales grew by a significant 14.6% during 4Q14, compared to the prior-year period. Owing to this trend, Macy’s is shutting down stores in a possible effort to focus on e-commerce offerings. The company announced earlier in 2015 that it would close 14 stores as part of a plan to restructure the company for enhancing online sales.

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4Q earnings fall

Macy’s reported a net income of $793 million for the 13 weeks ended January 31, 2015. This represented a decline from $811 million in the prior-year period. Diluted EPS (earnings per share) rose to $2.26 during the fourth quarter, up from $2.16 in the year-ago quarter. Sales for the quarter were $9.36 billion, up from $9.2 billion in the prior-year period, which fell short of analyst estimates of $9.4 billion. The company’s dividend yield is 1.8%, while Kohl’s (KSS) offers a value of 1.7% and Nordstrom (JWN) offers a value of 1.7%.

About Macy’s

Macy’s was incorporated in 1985. It is an omni-channel retail company that operates Internet websites and stores. The company is engaged in the sale of a large assortment of merchandise, including accessories and apparel, home furnishings, cosmetics, and other consumer goods. The company, whose fiscal 2014 sales amounted to $28.1 billion, operates the Bloomingdale’s and Macy’s brands with more than 800 stores in 45 states, Puerto Rico, Guam, and the District of Columbia.

The next part of this series will discuss TPG-Axon’s closed position in Monsanto (MON).

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