Earnings Preview: Macy's, Inc

Macy's, Inc (M) is expected to report Q4 earnings Tuesday with a conference call scheduled for 10:00 a.m. ET.

Guidance

Analysts are looking for a profit of $1.60 on revenue of $8.8B. The consensus range is $1.58 to $1.64 for EPS, and revenue of $8.68B to $8.94B, according to Reuters. The company recently reported its January same store sales were down 7.1% and said it sees 2008 SSS down 1% to up 5%. Macy's also sees Q4 EPS ex-tax credit $1.57 to $1.62 and is assuming a continued challenging economic environment through most of the year with some modest improvement expected by Q4.

Analyst Views

Standard & Poor's lowered its ratings on Macy's, including the corporate credit long and short-term ratings, following the U.S.-based department store company's report of further operating disappointments. S&P lowered the corporate credit rating to BBB- from BBB and the short-term rating to A-3 from A-2, with a stable outlook, citing expectation that credit metrics for the current 2008 fiscal year will be hard pressed to make any progress from the already mediocre levels likely for 2007.

Citigroup was disappointed by the company's same store sales coming in at the low-end of its plan and believes management's 2008 SSS guidance is still too optimistic. They have a Hold rating and $25 target on the stock. January's sales data followed a soft holiday season for retailers. Consumers, worried the U.S. economy is headed into a recession, cut back on spending, faced with problems such as the credit crunch, soft housing market and high gas prices.

Macy's closed nine stores in December and announced the consolidation of three divisions in February. The savings from the divisional consolidation process are expected to reduce Macy's SG&A expense by approximately $100M, beginning in 2009, the company said. The consolidation will affect approximately 2,550 positions.

Comments

[User 156338:]

Macy's continues to tank in Chicago and throughout the Midwest. It's too late for them to turnaround here because of the ill-will they created by eliminating the venerable, more upscale Marshall Field's brand. I wish they'd close their stores in the Chicago area.

2008 Feb 26 02:15 PM