Morningstar | Macy's Drives Results With North Star Strategy and Digital Efforts; Shares Fairly Valued
After years of acquisitions, Macy's is now one of the largest U.S. department stores. It united a conglomerate of regional brands under the Macy's and Bloomingdale's brands, localized merchandise, developed omnichannel capabilities, and pulled out excess costs. Investors were rewarded with a total shareholder return of 412% from fiscal 2009 through fiscal 2015. However, the company has since stumbled.We believe that secular issues will continue to weigh on performance in the long term. We think spending has shifted from apparel to other categories, department stores are most exposed to online competition and will be forced to compete on price, and the renovation of such a large store base to meet the retailing demands of the modern consumer will require tremendous investment and complex restructuring. We think Macy's is doing everything in its power to fight these headwinds by shifting exposure to stronger categories, increasing exclusive product/private label, remodeling key stores (Growth50), and providing the value demanded by consumers (Backstage). We also acknowledge that real estate will provide some floor to valuation. However, in the long run, we think the overcrowded competitive landscape, continued decline of department store market share to online and off-price, and shift of share of wallet to other categories, will continue to pressure top-line growth and merchandise margins. As such, we now model average annual revenue declines persisting over the next five years.Macy's is an omnichannel retail organization operating stores, websites and mobile applications under three brands (Macy's, Bloomingdale's and bluemercury) that sell merchandise, including apparel and accessories (men's, women's and children's), cosmetics, home furnishings and other consumer goods. The company's wholly-owned bank subsidiary, FDS Bank, provides certain collections, customer service and credit marketing services in respect of all credit card accounts that are owned either by Department Stores National Bank, a subsidiary of Citibank, N.A., or FDS Bank and that constitute a part of the credit programs of the company's retail operations.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.