The 'Retailpocalypse' Has Ended—Macy’s Emerges as a Top Bargain: Optimistic Analysts
Macy’s, headquartered in Cincinnati, has experienced a remarkable 43.9% stock increase year-to-date and an impressive 52.3% return over the past 12 months.
Concerns about Amazon.com Inc. (AMZN) completely disrupting traditional retail have been exaggerated, according to a group of market analysts who believe that established brands and retailers are finally adapting to thrive in the digital age. (See also: Amazon Expected to Lead Apparel Market in 2018: Morgan Stanley.)
Evercore ISI analysts have upgraded Macy's Inc. (M), the iconic department store chain, from a short to a long position, anticipating substantial gains as the retail sector reaches a pivotal turning point, CNBC reports. The firm argues that the market has overestimated the challenges faced by legacy retailers as they improve inventory management and effectively engage a shifting consumer base.
Analyst Omar Saad from Evercore highlighted Macy's competitive advantages, including superior brand access, its well-known franchise status, and valuable real estate in prime locations offered at low or no cost compared to many online competitors led by the Seattle-based giant. Macy's physical stores also present opportunities to serve as local distribution hubs in the e-commerce era.
Revitalizing Retail with Pop-Up Concepts
Saad praised Macy's strategic efforts to connect with modern consumers, such as acquiring New York’s innovative concept store Story, which offers curated, rotating themed shopping experiences. Additional pop-up stores aimed at younger demographics help offset less profitable retail space, according to CNBC.
Macy's, based in Cincinnati, has outperformed the broader market with its stock rising 43.9% year-to-date and delivering a 52.3% return over the last year, compared to the S&P 500’s gains of 2.6% and 12.5% over the same periods.
The Evercore ISI analyst revised Macy’s 2018 earnings per share (EPS) forecast upward to $3.15 from $2.95 and increased the 2019 estimate to $3.40 from $3.10. (See also: Macy’s and Target Among Retailers Making a Strong Comeback.)
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