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Can Macy’s Stock Recover in 2018?

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Jan. 5 2018, Published 9:34 a.m. ET

Stock down in 2017

On December 29, 2017, Macy’s (M) stock had risen 29.2% since its fiscal 3Q17 results were announced in November 2017. The rise was triggered by positive news about the retail sector’s crucial holiday season sales.

Despite the recent rise in November and December, Macy’s stock fell 29.7% in 2017. Challenging conditions in the retail market and rising competition from online retailers adversely impacted the stocks of Macy’s and its department store peers. As mentioned in Part One of this series, Macy’s stock fell 3.3% on January 4, 2018, in reaction to the news about its holiday sales.

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Weakness across the sector

Macy’s and major department store stocks underperformed the S&P 500 Index in 2017. The stocks of Nordstrom (JWN) and JCPenney (JCP) fell 1.1% and 62.0%, respectively, in 2017. In contrast, Kohl’s (KSS) stock rose 9.8% in 2017. The S&P 500 Index rose 19.4% in 2017.

Macy’s stock rose 11.0% on November 9 in reaction to its fiscal 3Q17 results. Macy’s lagged analysts’ sales estimates in the third quarter, but investors seemed happy with the company as it surpassed earnings expectations and sounded positive about holiday season sales.

On December 26, the stocks of Macy’s, Nordstrom, Kohl’s, and JCPenney rose 4.6%, 2.0%, 6.0%, and 5.4%, respectively, in reaction to positive holiday sales data from Mastercard SpendingPulse. A Mastercard SpendingPulse report stated that holiday sales had risen 4.9% in 2017.

On January 4, Macy’s reported a 1.0% rise in its same-store sales for the 2017 holiday season. Mid-tier department store JCPenney’s 2017 holiday same-store sales grew 3.4%. Some analysts raised their 12-month price targets for Macy’s stock following the news about the company’s holiday sales. We’ll look at analysts’ ratings for Macy’s stock in Part Six of this series.

We’ll take a look at the company’s updated sales guidance in the next part of this series.

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