Shares of Macy’s are advancing 6% in Wednesday’s pre-market trading after the department store operator’s 2Q revenue of $3.56 billion surpassed the Street consensus. Analysts had anticipated sales of $3.48 billion.
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Macy’s (M) posted 2Q loss of $0.81 per share versus a loss of $1.77 per share anticipated by analysts. Same-store sales dropped 35.1% in the reported quarter versus the 28.2% decline forecasted by analysts. Digital sales jumped 53% year-over-year, as consumers shopped more online during the pandemic.
Macy’s CEO Jeff Gennette stated that the 2Q performance “was stronger than anticipated across all three brands: Macy’s, Bloomingdale’s and Bluemercury, driven largely by the sales recovery of our stores.” However, amid the uncertainty related to COVID-19, Gennette continues “to approach the back half of the year conservatively.”
Back in July, UBS analyst Jay Sole had downgraded Macy’s to Sell from Hold and cut the price target to $3 (57.2% downside potential) from $6 saying “To deliver steady long-term growth, we believe brands can no longer rely on Malls or Dept. Stores to drive traffic.” He added that “the market does not fully appreciate how much COVID-19 will permanently disrupt the retail landscape.” (See M stock analysis on TipRanks).
Currently, the Street has a bearish outlook on the stock. The Moderate Sell analyst consensus is based on 4 Sells and 3 Holds. With shares down 58% year-to-date, the average price target of $5.57 implies downside potential of 20.5% to current levels.
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