How Much Trouble Will Macy's Face for Its Q1 Report?

Macy’s Inc. (NYSE: M) is scheduled to release its fiscal first-quarter financial results before the markets open on Thursday. The consensus estimates are calling for a net loss of $1.22 per share and $3.29 billion in revenue. The same period of last year reportedly had $0.44 in earnings per share and $5.68 billion in revenue.

Over the next couple of months, Macy’s will open all 775 of its stores. This includes its Bluemercury outlets. The company’s CEO Jeff Gennette says he does not know how many people will show up. He hopes store traffic will return, over time, as consumers are allowed to leave their homes.

Macy’s does have an online presence, but it does not represent a large portion of the retailer’s $25 billion in revenue. Macy’s sales were off a modest amount before the COVID-19 spread shuttered its physical operations. In its most recently announced quarter, revenue was $8.3 billion. It provided guidance for the current year, which obviously now is worthless.

To say Macy’s is in financial distress is an understatement. It recently took on $5 billion in debt from Bank of America and other financial institutions. Prior to the deal, Macy’s had killed its dividend and drawn down $1.5 billion from a revolving line of credit.

If anything, this earnings report will show just how distressed the company is and where it stands financially.

Excluding Wednesday’s move, Macy’s stock had underperformed the S&P 500 and Dow Jones industrial average with a decline of about 70% year to date. Over the past 52 weeks, the share price was down closer to 76%.

A few analysts weighed in on Macy’s ahead of the report:

  • Deutsche Bank has a Hold rating with a $7 price target.
  • UBS has a Neutral rating with a $6 target price.
  • Morgan Stanley rates it as Underweight with a $5 target.
  • Cleveland Research has an Underperform rating.
  • Citigroup’s Sell rating comes with a $5 price target.

Macy’s stock traded up about 1% at $5.13 on Wednesday, in a 52-week range of $4.38 to $23.40. The consensus price target is $7.77.