Coming off a disappointing holiday season, Deutsche Bank is throwing in the towel, shoes and handbags on Macy’s Inc. M. At time of writing, shares were plummeting over 14 percent on Thursday.
Macy’s announced it would be closing 68 stores and cutting over 10,000 jobs following a weak showing during the holidays. Same-store sales came in at -2.1 percent.
Analyst Commentary
Commenting on the figures, Deutsche Bank expressed surprise that Macy’s CEO Terry Lundgren guided 2017 comp as in line with holiday results.
“In our view, this discouraging 2017 forecast reflects the realities of market share losses to off-price retail and other online threats with the pace of store rationalization and monetization just not fast enough,” said Deutsche Bank.
Improvements by off-price retailers TJX Companies Inc TJX and Ross Stores, Inc. ROST, combined with e-commerce growth, have been cannibalizing old-fashion department stores Macy’s, J C Penney Company Inc JCP and Sears Holdings Corp SHLD, which just announced it would be closing 150 stores as well and selling the Craftsman tool brand for $900 million.
Deutsche Bank noted that while management did have some good performance in streamlining operations and reducing expenses, core earnings ex-real estate were declining at “an alarming pace.”
The German bank lowered its price target to $34 from $47 and downgraded the company to a Hold from a Buy.
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