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What’s Expected for Macy’s Fourth-Quarter Results

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Upcoming fourth-quarter results

Department store chain Macy’s (M) is set to announce its fiscal 2018 fourth-quarter[1.ended February 2] results on February 26. Analysts expect the company’s sales and EPS to fall year-over-year following Macy’s weak holiday performance.

Macy’s stock plunged 17.7% on January 10 as investors were disappointed with the company’s weak holiday sales update and its downward revision to its fiscal 2018 outlook.

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Year-to-date movement

As of February 20, Macy’s stock had fallen 16.0% this year, while Nordstrom (JWN) and Kohl’s (KSS) had fallen 3.5% and 1.3%, respectively. JCPenney had risen 25.0%, and the S&P 500 had risen 11.1%.

Following the company’s disappointing holiday sales update, Bank of America Merrill Lynch lowered its rating for Macy’s to “underperform” from “neutral” and cut its price target to $18 from $39. Cowen and Company, Gordon Haskett, RBC Capital Markets, Telsey Advisory Group, and JPMorgan Chase also reduced their price targets for Macy’s in reaction to its weak holiday sales.

Morgan Stanley raised its price target for Macy’s stock to $24 from $23 on February 14, and UBS lowered its price target to $26 from $28 on February 19. Of the 18 analysts covering Macy’s stock, ten (55%) recommend “hold,” three recommend “buy,” and five recommend “sell.” Their 12-month price target of $26.86 for Macy’s stock implies a 7.4% upside.

Intense competition from Amazon (AMZN) and off-price retailers has been impacting sales for Macy’s and its department store peers. Macy’s is investing in its digital channels to attract online shoppers, which, along with other growth investments, is pressuring margins. We’ll look at what analysts expect for Macy’s sales in the next part of this series.

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