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Macy's (M) Rides on First 50 initiative, Omnichannel Presence

Macy's, Inc. M comprehensive revitalization and growth strategy encompasses operational modernization, technological integration and enhanced customer engagement. Through initiatives like the "First 50," strengthening its omnichannel presence and the implementation of the "A Bold New Chapter" strategy, M aims to adapt to evolving market dynamics and drive sustainable growth. With a focus on efficiency, profitability and innovation, the company is poised to firm its position in the retail landscape and deliver long-term value to shareholders.

Macy's has launched the "First 50" initiative, selecting store locations strategically to test new retail strategies, including product introductions and visual merchandising improvements. These stores, chosen for their geographic diversity, enable Macy's to evaluate the effectiveness of various strategies across different markets. The initiative has shown success, with 3.4% growth in comparable sales and increased customer satisfaction in the first quarter of fiscal 2024, indicating potential for expansion to more Macy's locations.

The company is advancing its omnichannel shopping experience by revamping its digital presence and marketing strategies. By integrating online and in-store experiences, and focusing on digital marketing, Macy's aims to enhance the customer journey across all platforms. These efforts are designed to boost customer loyalty and conversions, reinforcing the company's leadership in the retail sector. The introduction of a digital marketplace with third-party sellers further supports this strategy, which is crucial for adapting to changing consumer behaviors and maintaining resilience in consumer spending.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

"A Bold New Chapter" Strategy Bodes Well

Fiscal 2024 marks the start of Macy's "A Bold New Chapter" strategy, a pivotal year focused on accelerating financial improvement through modernization and technological integration. Macy's plans to close 150 underperforming stores and enhance 350 others, optimizing its real estate portfolio to boost profitability.

Modernizing operations with cutting-edge technologies, including AI, Macy's aims to streamline the supply chain and optimize inventory management. This focus on efficiency and responsiveness lays a robust foundation for sustainable growth in a competitive retail landscape.

Other Strategic Endeavors

Macy's strategic asset monetization plan targets significant capital generation through the closure of stores and distribution centers, aiming for gains between $250 million and $365 million from fiscal 2024 to 2026. This plan underscores Macy's commitment to enhancing shareholder value, and ensuring long-term sustainability and growth. Additionally, Macy's has raised more than $2.4 billion from real estate monetization between fiscal 2015 and 2023, securing long-term sustainability and growth.

Wrapping Up

With a commitment to innovation, Macy's has set ambitious targets for 2025 and beyond, including annual low-single-digit growth in comparable sales and mid-single-digit growth in adjusted EBITDA. The company also anticipates a return to the pre-pandemic levels of annual free cash flow, demonstrating confidence in robust cash earnings and financial flexibility. By streamlining operations, optimizing its real estate portfolio and leveraging AI for efficiency, Macy's is positioning itself to thrive in an evolving market environment.

Zacks Rank & Estimates

This Zacks Rank #2 (Buy) company has outpaced the industry over the past year. In the said period, shares of the company have gained 18% compared with the industry’s 17.9% growth.

The positive sentiment surrounding Macy's is reflected in the upward revisions of the Zacks Consensus Estimate for earnings per share. Over the past 30 days, analysts have increased earnings estimates for the current fiscal year by 25 cents. The consensus estimate is pegged at $2.79 per share. The estimate for the next fiscal year has also been raised by 23 cents to $2.80 per share.

Three Other Solid Picks

Some other top-ranked stocks in the retail space are The Gap, Inc. GPS, Abercrombie & Fitch Co. ANF and Canada Goose GOOS.

Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 21.7% and 0.2%, respectively, from the fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.

The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.

Canada Goose is a global outerwear brand. It currently sports a Zacks Rank of 1.

The Zacks Consensus Estimate for Canada Goose’s fiscal 2025 earnings indicates growth of 13.7% from the year-ago actual. GOOS has a trailing four-quarter average earnings surprise of 70.9%.

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