M - Embedded Expectations Analysis - 2020 05 01
Macy's, Inc. (M:USA) currently trades at a discount to UAFRS-based (Uniform) assets, with a 0.8x Uniform P/B. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about vendor growth, cost management, and COVID-19 headwindsSpecifically, management may lack confidence in their ability to expand Growth store counts, continue to improve inventory turns, and sustain new vendor growth. In addition, they may lack confidence in their ability to strengthen their balance sheet, manage their cost base, and improve adjusted EPS. Moreover, management may be exaggerating the total cost savings from their Polaris strategy, their ability to make private brands a quarter of their business by 2025, and their ability to flexibly move production out of China. Furthermore, they may have concerns about the impact of COVID-19 on sales and their Hong Kong operations and potential headwinds from their executive headcount reductio
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.
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