Macy’s Trades Above 50 & 100-Day SMAs: Key Insights for Investors

Macy’s Trades Above 50 & 100-Day SMAs: Key Insights for Investors

Macy’s, Inc. M has demonstrated strong upward momentum, trading above its 50 and 100-day simple moving averages (SMAs). SMA is a key indicator of price stability and long-term bullish trends. 

The company ended Friday’s trading session at $16.82, above its 50 and 100-day SMAs of $15.93 and $15.62, respectively, highlighting a continued uptrend. This technical strength, combined with consistent momentum, reflects positive market sentiment and investor confidence in Macy’s financial stability and growth potential.

M Trades Above 50 & 200-Day Moving Averages

 

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Image Source: Zacks Investment Research

 

Shares of this omnichannel retailer have gained 9.5% compared with the Zacks Retail – Regional Department Stores industry’s 8.8% growth in the past three months. The company’s enhanced operational efficiency and growth initiatives have also helped it outperform the broader Retail-Wholesale sector and the S&P 500 index’s rise of 7% and 3.8%, respectively, during the same period.

M Stock Past Three-Month Performance

 

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Image Source: Zacks Investment Research

 

Macy’s Advanced Bold New Chapter Strategy

M’s “Bold New Chapter” strategy is making notable progress in key areas such as luxury growth, operational modernization and strengthening the Macy’s nameplate. By focusing on these three pillars, Macy’s has positioned itself for long-term growth and profitability. This strategy has already yielded positive results, including strong performance in the First 50 locations and successful pilot programs.

The effectiveness is also reflected in Macy’s commitment to maintaining financial discipline. The company has controlled expenses effectively, leading to higher-than-expected gains from asset sales. These factors are integral to the company’s ability to deliver continued positive results and build a more robust future for the business.

M’s Strong Performance in First 50 Locations

Macy’s has demonstrated remarkable success with its “First 50” locations, which saw a 1.9% increase in comparable sales (comps) for the third quarter of fiscal 2024. The success was attributed to investments in staffing, merchandising and visual presentation, which collectively enhanced the customer experience. These initiatives led to a notable 400-basis-point improvement in net promoter scores, reflecting a positive shift in customer satisfaction compared to the previous year.

M is focused on testing additional staffing in high-demand categories like women’s shoes and handbags at around 100 locations. This experiment yielded impressive results, with women’s shoes and handbags outperforming sales expectations by 600 and 700 basis points, respectively, in the fiscal third quarter. The initiative demonstrates the efficacy of personalized, in-store customer assistance in driving sales, reinforcing Macy’s commitment to improving customer interactions and service.

Luxury Segment Growth & Digital Expansion of Macy’s

The company’s luxury-focused segments, Bloomingdale’s and Bluemercury, posted solid performances in the fiscal third quarter. Bloomingdale’s achieved a 1% increase in comps on an owned basis and 3.2% on an owned-plus-licensed-plus-marketplace basis due to strong performances in contemporary apparel, beauty and digital channels. The retailer’s successful “From Italy with Love” campaign, showcasing exclusive Italian products, generated approximately 2 billion media impressions, driving traffic and increasing brand visibility. 

Bluemercury, which specializes in beauty products, marked its 15th consecutive quarter of positive comps with a 3.3% increase. The company’s focus on remodeling existing locations and opening stores has proven successful, with remodeled and new locations outperforming the overall fleet.

Macy’s has made significant strides in enhancing its digital and supply-chain operations. The company improved fulfillment speed by approximately 800 basis points, which has not only reduced costs but also boosted net promoter scores related to product availability and delivery. These digital and operational improvements position Macy’s to continue driving growth and customer satisfaction in the coming quarters.

Cautious Consumer Spending Hurts M’s Sales

Management acknowledged that consumers remain cautious in discretionary spending due to macroeconomic pressures. This behavior, coupled with heightened competition, makes it challenging for Macy’s to drive revenue growth. 

M registered a 2.4% year-over-year decline in net sales for the fiscal third quarter, led by shifting consumer spending toward non-discretionary items. Comps also dropped 2.4% on an owned basis. The unseasonably mild temperatures also significantly impacted Macy’s performance in the fiscal third quarter. 

As a result, the company projects fiscal fourth-quarter net sales between $7.8 billion and $8 billion, suggesting a decrease from the $8.1 billion reported in the previous year. The company expects a 35.3-35.7% decline in the gross margin, whereas it reported 37.5% in the prior year. Adjusted earnings per share are forecast to be $1.40-$1.65, suggesting a decline from the $2.45 reported in the fourth quarter of fiscal 2023.

Macy’s foresees fiscal 2024 net sales between $22.3 billion and $22.5 billion, suggesting a dip from the $23.1 billion posted in fiscal 2023. The company anticipates the gross margin to be 38.2-38.3%, whereas it reported 38.8% in fiscal 2023. Adjusted EBITDA is expected to be 8-8.4% of total revenues. In fiscal 2023, adjusted EBITDA was 10%. In terms of adjusted earnings per share, Macy’s expects $2.25-$2.50, indicating a drop from the $3.50 recorded in the prior year.

Final Thoughts on Macy’s

The M stock presents a balanced mix of positive and negative factors for investors. On the positive side, the company has demonstrated solid momentum, trading above key moving averages, indicating sustained investor confidence. Its strategic focus on luxury growth, operational modernization and enhancing the customer experience is showing positive results, especially in key locations and with luxury brands like Bloomingdale’s and Bluemercury. Additionally, Macy’s digital and supply-chain improvements position it for continued growth and operational efficiency.

However, on the negative side, M is facing challenges such as declining sales and a cautious consumer outlook. Increased competition and pressure on profit margins in the short term raise concerns. Investors should consider retaining this Zacks Rank #3 (Hold) stock in their portfolios for now.

Stocks to Consider

We have highlighted three better-ranked stocks, namely The Gap, Inc. GAP, Abercrombie & Fitch Co. ANF and Deckers Outdoor Corporation DECK.

Gap is a premier international specialty retailer offering a diverse range of clothing, accessories and personal care products. It presently flaunts 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 2025 earnings and sales indicates growth of 41.5% and 0.8%, respectively, from the fiscal 2024 reported figures. GAP delivered a trailing four-quarter average earnings surprise of 101.2%.

Abercrombie is a specialty retailer of premium, high-quality casual apparel. It currently sports a Zacks Rank of 1.

The Zacks Consensus Estimate for ANF’s fiscal 2025 earnings and sales indicates growth of 69.3% and 15%, respectively, from the fiscal 2024 reported levels. ANF delivered a trailing four-quarter average earnings surprise of 14.8%.

Deckers is a leading designer, producer and brand manager of innovative, niche footwear and accessories. It carries a Zacks Rank of 2 at present.

The Zacks Consensus Estimate for DECK’s fiscal 2024 earnings and sales indicates growth of 13% and 13.6%, respectively, from the year-ago actuals. DECK delivered a trailing four-quarter average earnings surprise of 40.6%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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