Deutsche Bank Sees Benefit To Macy's

Deutsche Bank has published a research report on Macy's Inc. M following the company's report of solid expense management that was of great benefit in the 3Q. In the report, Deutsche Bank writes "Q3 EPS of $0.08, ex-items, was $0.03 above Consensus. Despite the beat, the recently-raised H2 EPS guidance was affirmed. Gross margins were up +13bp adjusting for an accounting change, reflecting solid inventory mgmt and better-than-expected sales. Adj. SG&A was well-controlled, up +0.6% y/y, though will grow faster in Q4. $1.2B in debt repaid year-to-date will bring down interest expense and will benefit Q4 and FY11. Given the low-growth nature of this traditional dept store, we see limited opportunity for multiple expansion." Deutsche Bank maintains its Hold rating and $27 price target. Macy's closed yesterday at $24.86.