With revenues of nearly $25.3 billion, Macy’s is one of the largest and oldest department stores in the United States. But how much is the retailer worth? Here’s a closer look at its financials.
|Headquarters||New York City|
|Founder||Rowland Hussey Macy|
One measure used by analysts to determine a company’s worth is market capitalization, or the total value of all company stock shares. As of May 2022, Macy’s worth based on market cap stands at around $6.75 billion.
Macy’s book value — or the sum of assets minus liabilities, divided by the number of shares — stood at around $12 per share in spring 2022, making its share price-to-book value ratio about 2.3. This number represents a drop from the price-to-book ratio of about 2.5 that Macy’s reached in October 2021. As price-to-book falls, a company’s shares typically become cheaper, meaning the stock market is lowering the value it assigns to future sales and net income.
Like many brick-and-mortar retail stores, Macy’s struggled through the COVID-19 pandemic, with its share price — which had hovered around the $20s for some time — sinking to about $5 during the recession of 2020. By April 2022, though, Macy’s stock had recovered to about $24 a share, mid-point between a 52-week high of $37.95 and a low of $15.55.
In recent quarters Macy’s has delivered some positive surprises to retail analysts. Throughout 2020 and 2021, the company reported better-than-expected earnings in every quarter. First-quarter 2022 earnings per share are expected to reach $0.79, continuing a strong uptrend in net profit over the last year.
|Market Capitalization||About $6.75 billion|
|Share Price, 52-Week Range||$15.55 to $37.95|
|Fiscal Year 2021 Revenue||$17.3 billion|
|Fiscal Year 2021 Net Income||$1.4 billion|
|Fiscal Year 2022 Adjusted Diluted Earnings Per Share||$4.13 to $4.52|
Good To Know
Companies in good financial shape will sometimes announce share buybacks, in which the business uses its own cash to purchase and “retire” its own shares. This reduces the number of outstanding shares and will generally boost per-share net income.
Macy’s reported net earnings per share of $2.45 for the last quarter ending December 2021. Analyst consensus for this period had stood at $1.99, meaning the company achieved a significant earnings beat.
Revenues also exceeded expectations, with Macy’s reporting nearly $8.7 billion in sales versus analyst consensus of roughly $8.45 billion. The result represented a 27.8% increase year over year from the last quarter of 2020.
The retail industry is in a constant state of flux, with companies opening new stores and closing unprofitable branches regularly. For that reason, analysts who specialize in retail use comparable same-store sales to more accurately measure growth. The 2021 figure for Macy’s represented a rise of 28.3% over the previous year, and a 6.6% increase over 2019, the last non-pandemic year.
Another key financial measure is gross margin, which rose from 33.7% to 36.5% from 2021 to 2022. Free cash flow was reported at $2.3 billion, the payment of debt brought down the company’s leverage ratio and Macy’s dividend was raised by 5%.
Macy’s Top 10 Shareholders
Mutual funds and private money management firms hold sizable stakes in Macy’s, although only BlackRock and Vanguard hold more than 10% of the outstanding shares. In early 2022, the largest transactions in Macy’s stock were purchased by Vanguard and Nordea Investment Management.
Institutional ownership in Macy’s stock is high at 87%. When a large percentage of shares are in the hands of institutions such as banks, insurance companies and mutual funds, the stock price tends to be relatively stable, as these companies don’t often buy or sell shares.
Here’s a look at Macy’s largest shareholders as of April 2022.
|BlackRock Fund Advisors||10.96%|
|The Vanguard Group||10.07%|
|SSGA Funds Management||4.11%|
|Dimensional Fund Advisors||2.64%|
|Geode Capital Management||1.93%|
|Contrarius Investment Management||1.86%|
|Northern Trust Investments||1.60%|
Macy’s Humble Origins
Founded by former sailor turned businessman Rowland H. Macy, Macy’s started out in 1858 as a dry goods store located on 14th Street and Sixth Avenue in Manhattan, N.Y. In its own history, Macy’s proudly recounts its humble first-day sales of $11.06, as well as first-year revenues of $85,000.
Over the years, the store became a commercial icon in New York, where it pioneered window shopping, on-site tailoring and department store Santas. In 1902, Macy’s moved its flagship store to Herald Square, at 34th Street and Broadway. The store has remained open for business at this busy location, which also serves as the company’s corporate headquarters.
Navigating a Competitive Environment
Macy’s became a national retail franchise in the 20th century and has long been a familiar presence in shopping malls across the country. Hard times arrived in the 1990s, however, as competition and a heavy debt load forced Macy’s into bankruptcy.
At about this time, department stores across the company were competing with Amazon’s online shopping experience and the “retail apocalypse,” in which department stores lost their appeal as well as their foot traffic, and the public increasingly browsed for home goods, clothing, cosmetics and other discretionary items at home.
After a merger with Federated Department Stores, Macy’s returned to profitability. In 2007, Federated rebranded itself as Macy’s and the company became a giant retail holding group that included Bloomingdale’s and nearly 200 other specialty retail stores. In the tough pandemic year of 2020, Macy’s topped all department store retailers with $24.6 billion in revenue. That sales figure decreased the following year, dropping by around 29.7% to $17.3 billion in 2021.
Macy’s vs. the Competition
Researching any company means comparing it to businesses of the same size and in the same investment sector. For Macy’s, the top omnichannel retailer in the country, rivals for a good comparison include Nordstrom and Kohl’s.
With revenues at around $14.8 billion, Nordstrom’s market capitalization stands at around $4.1 billion. By comparison, Kohl’s weighs in a bit higher, with revenues at around $19.4 billion and a market cap of nearly $7.3 billion.
Among these competitors, Macy stands out for analyst recommendations. A major platform for individual investors, Fidelity offers a wealth of data on this point for those researching public companies. The Equity Summary Score — Fidelity’s popular measure of investment strength — was at a bullish 8.5 for Macy’s in April 2022, with three buy recommendations, four neutrals and one sell. The same measure stood at six (neutral) for Nordstrom and 7.5 for Kohl’s.
Despite a return to profitability and a series of positive earnings reports through 2021, Macy’s has an uncertain path ahead. A steep rise in the cost of living that began in early 2022 put many consumers’ spending plans on hold. Discretionary purchases, such as household and leisure products, are now competing with other big-ticket decisions, such as automobiles and travel.
Regular quarterly and annual forecasts by public companies provide financial analysts with an important measure of a company’s health. In February 2022, Macy’s forecasted slow or flat growth in sales numbers for the year ahead. Two months later, the company reported slowing demand for home goods and casual clothing — categories that remained strong through the height of the pandemic.
In spring 2022, Macy’s announced a $1 billion buyback program in addition to a previously announced $500 million buyback. Continued revenue growth in combination with this sizable buyback should support the value of Macy’s shares in the year ahead.
Information is accurate as of May 5, 2022.
Editorial Note: This content is not provided by Macy’s. Any opinions, analyses, reviews, ratings or recommendations expressed in this article are those of the author alone and have not been reviewed, approved or otherwise endorsed by Macy’s.