Morgan Stanley Downgrades Macy’s Stock

Following a downgraded rating from Morgan Stanley, Macy’s stock dropped more than 3 percent on Thursday (May 10). The investment bank had put an “underweight” rating on the stock, CNN Money reported.

Despite the recent fall, Macy’s stock is still up 15 percent this year as the retailer has stepped up its eCommerce efforts, closed some stores and sold some real estate. But Morgan Stanley Analyst Kimberly Greenberger believes that the market is focusing on quick fixes: She thinks that Macy’s still needs to shutter more underperforming stores.

Greenberger wrote, “Even though Macy’s is closing stores proactively, it may not be doing so quickly enough.”

In addition, Greenberger said there are not many flagship Macy’s properties that have significant value, other than the company’s Herald Square location. The retailer has already sold real estate in  San Francisco’s Union Square, for example, and intends to sell another building in San Francisco as well.

“Macy’s real estate gains cannot continue in perpetuity,” Greenberger added.

Even so, the news comes as Macy’s has been ranked the top eCommerce destination for apparel in SimilarWeb’s latest index. The retailer’s website has nearly 56 million average monthly visits, Retail Dive reported.

Still, Macy’s is losing market share to competitors such as Amazon, according to Coresight Research. The think tank found a decline of 410 basis points in the retailer’s apparel share as its revenues declined by $3 billion from 2012 to 2017. Of survey respondents who said they are spending less at Macy’s than they have in the past, 53 percent of Amazon Prime members reported they shop at Amazon instead, compared to 22 percent of respondents who were not members of Prime.

Even so, there are opportunities for retailers like Macy’s in the mobile arena. According to SimilarWeb, more than half of online traffic for general merchandise originates from mobile platforms.