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Can Macy's Sustain Sales Growth?

A stronger consumer, cold weather, and tax benefits were large contributors to the retailer's fourth-quarter results.

No-moat

Therefore, we expect to increase our $28 fair value estimate by 5%-7% to reflect the benefits of tax reform, time value of money, and better merchandising and inventory but think that top-line growth will still average below total U.S. retail sales growth in the down 1% to up 1% range and that adjusted operating margin will decline once asset sales gains moderate (likely to the mid-single-digit range from 8.4% in fiscal 2017). With the runup in shares, we now view the name as more fairly valued.

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About the Author

Bridget Weishaar

Senior Equity Analyst

Bridget Weishaar is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers apparel retailers.

Before joining Morningstar in 2013, Weishaar spent five years as an equity analyst on the Internet research team at J.P. Morgan. She also worked as a retail analyst for Bear Stearns.

Weishaar holds a bachelor’s degree in science pre-professional studies from the University of Notre Dame and a master’s degree in business administration from The Wharton School of the University of Pennsylvania.

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