Macy's Looks Like It Will Fall Into the Retail Apocalypse
I've always rooted for Macy's (NYSE: M). The company evokes nostalgia for an America long gone. Too bad you can't invest in nostalgia. Macy's has fought the retail apocalypse more than other names like Sears or J.C. Penney, but we're still witnessing a gradual deterioration of the company's health. Macy's retains a strong balance sheet, which will give it more time, but it doesn't make the shares a good buy. We've seen very little indication that comp sales will grow strongly enough to drive a meaningful turnaround. As a result, Macy's stock seems unlikely to keep up with the broader market.
Macy's profitability deteriorated in the first half of fiscal 2019. Gross margin was 38.5%, compared to 39.7% in the first half of fiscal 2018. Operating income as a percentage of revenue was 3.2%, versus 4.9% in the prior-year period. Overall, I'm not expecting any big positives from Macy's third-quarter results. U.S. retail sales were soft in September, declining by 0.3% sequentially. Considering that Macy's has struggled to grow its sales, that weakness won't have done it any favors.
Source Fool.com
