Macy's CFO Departure Adds Further 'Uncertainty'

Macy's Inc M announced Tuesday its CFO and Executive Vice President Paula Price will leave the company and this transition adds another layer of "uncertainty" at an already "turbulent period," according to BofA Securities.

The Macy's Analyst

Lorraine Hutchinson maintains an Underperform rating on Macy's stock with a $5 price target.

The Macy's Thesis

Price will stay on to guide Macy's over the coming two months as the company undergoes an external search process. But if Macy's stores re-open in the coming weeks, the lack of an active CFO at a potential recovery period "heightens execution risk."

Meanwhile, the search process will eat up valuable management and board time while the whole team needs to be ultra-focused on key decisions, including managing liquidity, leverage, and prioritizing capital investments.

Hutchinson said Price was also a key figure in the "Polaris" three-year strategy along with initiatives like a $1.5 billion cost-cutting program. The savings initiatives was "even more essential" for Macy's amid a lower sales base.

Price's decision to leave the company likely implies Macy's will emerge from the coronavirus crisis "worse off" than when it entered. As such, a bearish stance on the stock remains justified.

M Price Action

Shares of Macy's were trading higher by 2.88% at $6.08.

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