Physical retail’s importance in the internet age has been in open and obvious decline for years. And when Macy’s (M) announced plans to shutter roughly 150 stores, that left many wondering what to do with yet another anchor store that’s about to be empty in roughly 150 places. The responses were surprising, and Macy’s shareholders were oddly pleased about the whole thing, leaving shares up nearly 3% in Monday afternoon’s trading.
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Reports suggest that malls are scrambling to figure out what to do with another anchor store that’s about to go empty. With many Macy’s stores measuring somewhere between 200,000 and 225,000 square feet, that’s a lot of room to do, well, something with. The question, however, is often what?
Interestingly, some ideas have already emerged. Subdivision, of course, is an option. Malls can split these massive stores into several smaller spaces or even perhaps a themed area that merits a separation like that. Others have wondered about going mixed-use, offering up apartments out of the huge spaces.
There’s something to be said for that; the parking already exists, after all, and living right next to a mall’s worth of stores could be a real draw. Throw in a housing crunch in many areas, and a whole slew of new income-producing assets might be a winning play.
Bringing Profitability Back to Macy’s
Earlier this year, Macy’s started what it calls “A Bold New Chapter,” an initiative that was designed to get the company back up and running again in an environment where stores lost a lot of luster after the COVID-19 disaster left many physical retail operations crippled. The Bold New Chapter is designed to bring profitability back to Macy’s by focusing on engaging employees and addressing “points of friction” that Macy’s heard about from the customer base. Nevertheless, only time will tell just how this Bold New Chapter turns out for Macy’s, but hopefully, it will arrest the downhill slide so many other retailers saw.
Is Macy’s a Good Stock to Buy Now?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on M stock based on four Buys, six Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 6.79% rally in its share price over the past year, the average M price target of $18.86 per share implies 18.39% upside potential.
