Cowen Remains Bullish on Macy's (M) Following Announced Store Closures
Cowen reiterated an Outperform rating and $70.00 price target on Macy's (NYSE: M) following the company's announcement to shutter 35 to 40 stores in early 2016. Analyst Oliver Chen believes that shrinking the fleet size is likely prudent as M makes greater investment in its online business.
Chen commented, "Yesterday AMC, M announced plans to shutter 35 to 40 stores in early 2016, following the net closure of 40 stores since 2010 for a current fleet of 770 stores. Ultimately, we believe shrinking the fleet size is likely prudent as M makes greater investment in its online business, which grew DD% in the 1H on top of DD% growth LY, and puts a greater focus on driving sales in its top 150 stores and platinum stores (~30 bestperforming stores) through elevated product, visual presentation, special events, more talented associates, & refining promotional messaging. We note the annual closure announcement came earlier this year vs. typical release post-holiday given the larger amount of closures (35-40 vs. 14 LY) as M merchants place orders now for Spring '16 merchandise. M has yet to announce the locations of the closures, but the closures are expected to result in lost annual sales volume of ~$300mm, net of sales expected to be retained by nearby stores & online."
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Shares of Macy's closed at $59.17 yesterday.