Stifel Affirms Macy's (M) at 'Buy'; Q1 Results Strong Amid Challenging Environment, Still Very Well Positioned

Stifel reaffirms its Buy rating and $64 target price on Macy's (NYSE: M) following Q! results issued ahead of the bell Wednesday.

Analyst Richard Jaffe noted that Macy's Q1 EPS of $.60 came in below his $.62 estimate, but above consensus views calling for $.59. Despite a challenging environment in 1Q, Macy’s was able to achieve solid results, evident in operating margin expansion of 30 bps. Comp store sales were below our estimate and consensus, -1.6% (including leased departments comps decreased 0.8%), due to soft business trends in January through March. In addition, 1Q was negatively impacted by a calendar shift of the Friends & Family event. However, trends improved in April when the weather moderated, leading us to believe merchandise in stores is on-trend. We believe the company is well positioned entering 2Q. In our opinion, 1Q demonstrates M’s continued effective execution of its key strategies: My Macys, MAGIC selling, omnichannel initiatives, and merchandising improvements, the analyst noted.

Bottom line: We believe Macy’s is well positioned as a dominant apparel retailer and in a better position than most to gain market share. In addition, its focus on improving the merchandise assortment while enhancing the customer experience both in stores and online will likely continue to drive strong results.

For an analyst ratings summary and ratings history on Macy's click here. For more ratings news on Macy's click here.

Shares of Macy's closed at $57.84 yesterday.

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