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On Thursday, Citi analyst Paul Lejuez maintained a Neutral rating on Macy’s stock with a consistent price target of $16.00. Lejuez highlighted that Macy’s fourth-quarter earnings per share (EPS) exceeded market expectations, primarily due to lower-than-anticipated selling, general, and administrative expenses (SG&A). However, the company’s forecast for fiscal year 2025, ranging between $2.05 and $2.25, falls short of the consensus estimate of $2.29. Macy’s first-quarter guidance for 2025 also did not meet consensus expectations, indicating a slow start to the year influenced by weather disruptions and fluctuating consumer confidence.
Macy’s management anticipates a decline in comparable store sales of 2.5% to 4.5% for the first quarter, in contrast to the consensus projection of flat sales. The retailer is entering the year with inventories that are slightly elevated, up by 2.5%, which is a concern given the current sales trends. Nevertheless, management noted that the inventory mix is fresher with fewer outdated items compared to the previous year. Despite these challenges, the company maintains a solid 5.22% dividend yield and generated $23.37 billion in revenue over the last twelve months.
The company has demonstrated effective expense management, but the sluggish beginning to fiscal year 2025 underscores the potential difficulties Macy’s may encounter throughout the year. The cautious outlook reflects the broader retail environment, where other retailers have also reported a slow start to the year, marked by challenges such as weather impacts and inconsistent consumer confidence levels. Macy’s management is taking a conservative approach to its sales projections for the upcoming quarter, aligning with the challenges observed across the retail sector. For a comprehensive analysis of Macy’s financial health and future prospects, including exclusive Fair Value models and detailed metrics, visit InvestingPro, where you’ll find an in-depth Pro Research Report covering what really matters for informed investment decisions.
In other recent news, Macy’s Inc. (NYSE:M) reported its fourth-quarter earnings for 2025, exceeding earnings per share (EPS) expectations but falling just short of revenue forecasts. The company achieved an EPS of $1.8, surpassing the projected $1.54, while revenue came in slightly below expectations at $7.77 billion against a forecast of $7.78 billion. Despite the positive EPS results, Macy’s shares experienced a decline in pre-market trading, reflecting investor concerns over future performance amid challenging market conditions. Additionally, Macy’s announced the closure of 64 underperforming stores, which has been part of its strategic efforts to streamline operations and improve delivery speeds.
The company also reported a significant 71% increase in free cash flow year-over-year, totaling $679 million. Looking ahead, Macy’s provided cautious guidance for 2025, with net sales expected to range from $21.0 billion to $21.4 billion and adjusted EPS anticipated between $2.05 and $2.25. The company plans to invest approximately $800 million in capital expenditures while forecasting a decline in comparable sales by 0.5% to 2%. Notably, Macy’s has been actively working on enhancing its customer experience and expanding its luxury offerings through Bloomingdale’s and Blue Mercury, both of which reported positive comparable sales trends.
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