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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

No-Moat Macy's Achieves Unexpected Profit in Q1 as Crisis Effects Fade; Shares Fully Valued

David Swartz Equity Analyst

Analyst Note

| David Swartz |

Fueled by government stimulus, widespread vaccinations, and pent-up demand, shoppers returned to no-moat Macy’s in the first quarter, leading to a large sales outperformance and an unexpected profit. While some of these factors may be transitory, the firm’s full-year guidance suggests sales trends look brighter than we had anticipated. Thus, we expect to raise our $17.40 fair value estimate by a mid-single-digit percentage, leaving the shares fully valued.

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Company Profile

Business Description

Founded in 1858, Macy’s operates nearly 600 stores under the Macy’s brand, 55 stores under the Bloomingdale’s brand, and about 162 freestanding Bluemercury specialty beauty stores. Macy’s also operates e-commerce sites, owns 65% of a Chinese e-commerce joint venture, and licenses two Bloomingdale’s stores in the United Arab Emirates and Kuwait. Women’s apparel, accessories, shoes, cosmetics, and fragrances constituted 58% of Macy’s 2020 sales. The retailer recently consolidated its headquarters in New York City.

Contact
151 West 34th Street
New York, NY, 10001
T +1 513 579-7780
Sector Consumer Cyclical
Industry Department Stores
Most Recent Earnings Apr 30, 2021
Fiscal Year End Jan 29, 2022
Stock Type Distressed
Employees 75,711

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