Goldman Sachs dropped Macy’s shares from neutral to sell, saying there is a “significant downside” in the company’s stock price. Macy’s shares already dropped about 48 percent to a market value of $4.8 billion in 2019. Macy’s shares were last up about 2.7 percent on Monday afternoon, with Gordon Haskett Analyst Chuck Grom telling CNBC that its clear “structural concerns persist” for this group of retailers.
The Moody’s growth forecast was slashed for the entire department store sector, predicting retailers’ profits would be down 20 percent by the end of 2019.
“Macy’s sales and operating margins have come under pressure in recent years, and we forecast this to continue,” said Analyst Alexandra Walvis. “Comps are under pressure, … and eCommerce growth drivers — like mobile and vendor direct — have only helped to mask significant underperformance in stores.”
When Macy’s reported earnings last month, the retailer pointed to promotional activity, and the expectation that momentum would continue.
“Off-price retailers and discounters, once again, posted robust sales, as customers continued to flock to value,” said Moody’s Senior Credit Officer Christina Boni. Off-price chains like TJ Maxx and Ross “are turning inventory roughly two times as fast as department store chains.”
“The competitive landscape remains extremely promotional, with no let-up as we wade further into the all-important holiday season,” Boni added. “Fewer days between Thanksgiving and Christmas, relative to last year, could exacerbate the promotional environment.”
Moody’s said it anticipates that 2020 will see department stores as “among the worst performers of retail.”
Macy’s November earnings report showed sluggish sales figures, sending its stock price spiraling. The retailer reported earnings of $.07 per share — about even with what analysts had been seeking. Revenue, however, was a miss, clocking in at $5.17 billion versus the expected $5.32 billion. It was also a drop from the results at this time last year, when Macy’s brought in $5.4 billion in net sales.