Wolfhounds

Do Macy's Debt Levels Indicate Weakness?

Your point of debt load of M and SHLD is misplaced, although important. The real problem is not comparing debt to revenue, but to FCF. M FCF has declined 50% the past 2 fiscal years and it has not reduced inventory, as most retailers have, as a means to increase cach flow even as revenue declines. That is why I believe M will not be able to roll over it's debt in an environment of declining sales. SHLD, which has declining y/y same store sales since 2005, keeps pushing down inventory to save cash. How long this will last remains to be seen, but is has substantial cash to keep afloat.