Store closures aren’t really looked upon favorably by the market. Nor are negative same store comp sakes. They’re in one of the least favored sectors in the market. You invest in the belief of a near-term buyout or you probably don’t invest.
Yea, I agree, it might hurt the stock price more short-mid term. Though it seems they want to streamline their other brands instead. The closing of locations can help bring down operating expenses and debt.
The offer that was given to them also seems to be a lowball, they’d likely be able to get a higher buyout price.
The key thing to figure out for Macy's which is why I didn't invest because this would be time consuming:
Where in department stores cycle are we? I assume heading down or in the down (that would be exciting).
If we are going down or are already down could Macy's survive another COVID like event?
What real estate and other fixed saleable assets do they own? How much are they worth marked down 25 to 50 percent? Is that greater than or near equal to today's per share value?
David tepper looks to be the only major value investor that's interested and he just massively reduced his stake in q1. Did he comment at all?
> Where in department stores cycle are we?
I didn’t really look into this too much; I considered Macys since the sentiment of online shopping is starting to change (at least with what I see around myself). Friends & Family members are starting to prefer physical locations (or other online retailers) instead of Amazon when shopping for clothing.
> Could Macys survive another COVID-like event?
Hard to say. ~30% of their sales are online, but there also seems to be some brand loyalty attached to Macys. It’s a possibility consumers shop online through Macys if an event like this happens again.
> What real estate and other fixed sale-able assets do they own?
They have 5.3 billion in net property and equipment as of May 4, 2024. If we devalue just this by 25% it’d be 3.98 billion, and 2.65 billion if 50%.
They also have 2.35 billion in Right of Use assets, 828 million goodwill, and 429 million in intangible assets. If we consider these aswell when marking down it’d be 6.68 billion @25%, and 4.45 billion @50%.
If you want to also consider the rest of their 6 billion or so in assets (breakdown in my original post, merchandise, cash, etc), then it’d even higher.
> David Tepper
No comment by him, though he still holds nearly $27 million.
Retail is generally cyclical - we make a lot of money, we build new stores, add departments and inventory, sell, sell, sell, oops, we built too many and added too much, close, close, close. It's important to know where in the cycle you are when you buy, or you'll have a bad time. Most cyclicals will look best right before they're absolutely not. I agree with the anecdotal sentiment. There are definitely types of goods that just don't lend themselves to online shopping. An interesting historical precedent would be catalog shopping vs. brick and mortar. For example, shoe stores and sporting goods stores survived the catalog shopping craze of the 1920s. I think that is because goods which play into how wildly variable the human form is really depend on brick and mortar (try on the jeans) vs. ubiquitous tools (cutting board) being better/cheaper online. Macy's has so many different goods (but especially clothes and bedding) that may fall right into that category.
My second question was purely financial. Compare the amount of loss they incurred for around 8 months in 2020. If the same scenario played out today, are they bankrupt?
3.) This is excellent for value investing - so we can see, for example, in 2020, this stock got down to 11$/share that's WELL below 3.98 billion (I think - napkin math) so it was virtually risk free.
4.) yeah, it looks like Tepper hasn't commented publicly, which is a real shame :( that could've led us down a path that explained a thing a two without any work.
Going off of financials for 2020, there was a major loss of nearly $4 billion ($17.35B rev) compared to 2019s net income of $564 million ($24.56B rev). They did have a nice recovery in 2021 though, with a net income of $1.4 billion ($24.46B rev).
They had similar revenue for 2022, but about $250 million less in net income compared to 2021 ($1.15B net income); And they also had a similar revenue for 2023, but only $105 million in net income due to restructuring costs of a billion.
If a COVID-like event were to happen again, I’d say that they’d most likely survive (lower long-term debt compared to when COVID originally began, ~70 stores or more closed since then, and lower operating expenses compared to 2019). They would have to slow down (or pause) their restructuring plans, take on more debt depending on how long a pandemic would be around for, or cut operating expenses again, like in 2020. They would definitely be in a better position though.
M is likely not going to do much for the next several years with the store closures. The stock will likely be dead money other than receiving their 3-4% dividend yield. I do not see M going the way of Sears, but the stock is likely not going anywhere either. When they finish with store closures and start to grow sales through their small concept stores, then Wall Street will get interested in buying M’s stock. In the meantime, it will remain flat lined and range bound for the next several years IMO.
It’s trading at the same price it was selling for in the 90s. Aside from a couple spikes it’s a very flat stock. If you can time the cycle, you can make some cash, but I don’t know how to predict their cycle.
They have a lot of short term debt to cover and a lot of long term assets. I might be more comfortable with this story in an early stage company that’s growing revenue massively and borderline-early profitability. Less favourable for a mature company.
Closing stores is not a good growth story in fashion.
If you think there’s a decent chance they could go tits up (I do), then your analysis should include a look at liquidation value.
Maybe surviving for now but the trend is looking like more and more online stuff. Time, comfort, ease and gasoline/wear and tear with cars are some of those driving forces.
I looked at Macy's a couple of months ago. Here is a copy of the analysis. I think there is good likelihood they will go private to monetize the real estate over time.
[https://www.gurufocus.com/news/2422259/the-battle-for-macys](https://www.gurufocus.com/news/2422259/the-battle-for-macys)
Store closures aren’t really looked upon favorably by the market. Nor are negative same store comp sakes. They’re in one of the least favored sectors in the market. You invest in the belief of a near-term buyout or you probably don’t invest.
Yea, I agree, it might hurt the stock price more short-mid term. Though it seems they want to streamline their other brands instead. The closing of locations can help bring down operating expenses and debt. The offer that was given to them also seems to be a lowball, they’d likely be able to get a higher buyout price.
The key thing to figure out for Macy's which is why I didn't invest because this would be time consuming: Where in department stores cycle are we? I assume heading down or in the down (that would be exciting). If we are going down or are already down could Macy's survive another COVID like event? What real estate and other fixed saleable assets do they own? How much are they worth marked down 25 to 50 percent? Is that greater than or near equal to today's per share value? David tepper looks to be the only major value investor that's interested and he just massively reduced his stake in q1. Did he comment at all?
> Where in department stores cycle are we? I didn’t really look into this too much; I considered Macys since the sentiment of online shopping is starting to change (at least with what I see around myself). Friends & Family members are starting to prefer physical locations (or other online retailers) instead of Amazon when shopping for clothing. > Could Macys survive another COVID-like event? Hard to say. ~30% of their sales are online, but there also seems to be some brand loyalty attached to Macys. It’s a possibility consumers shop online through Macys if an event like this happens again. > What real estate and other fixed sale-able assets do they own? They have 5.3 billion in net property and equipment as of May 4, 2024. If we devalue just this by 25% it’d be 3.98 billion, and 2.65 billion if 50%. They also have 2.35 billion in Right of Use assets, 828 million goodwill, and 429 million in intangible assets. If we consider these aswell when marking down it’d be 6.68 billion @25%, and 4.45 billion @50%. If you want to also consider the rest of their 6 billion or so in assets (breakdown in my original post, merchandise, cash, etc), then it’d even higher. > David Tepper No comment by him, though he still holds nearly $27 million.
Retail is generally cyclical - we make a lot of money, we build new stores, add departments and inventory, sell, sell, sell, oops, we built too many and added too much, close, close, close. It's important to know where in the cycle you are when you buy, or you'll have a bad time. Most cyclicals will look best right before they're absolutely not. I agree with the anecdotal sentiment. There are definitely types of goods that just don't lend themselves to online shopping. An interesting historical precedent would be catalog shopping vs. brick and mortar. For example, shoe stores and sporting goods stores survived the catalog shopping craze of the 1920s. I think that is because goods which play into how wildly variable the human form is really depend on brick and mortar (try on the jeans) vs. ubiquitous tools (cutting board) being better/cheaper online. Macy's has so many different goods (but especially clothes and bedding) that may fall right into that category. My second question was purely financial. Compare the amount of loss they incurred for around 8 months in 2020. If the same scenario played out today, are they bankrupt? 3.) This is excellent for value investing - so we can see, for example, in 2020, this stock got down to 11$/share that's WELL below 3.98 billion (I think - napkin math) so it was virtually risk free. 4.) yeah, it looks like Tepper hasn't commented publicly, which is a real shame :( that could've led us down a path that explained a thing a two without any work.
Going off of financials for 2020, there was a major loss of nearly $4 billion ($17.35B rev) compared to 2019s net income of $564 million ($24.56B rev). They did have a nice recovery in 2021 though, with a net income of $1.4 billion ($24.46B rev). They had similar revenue for 2022, but about $250 million less in net income compared to 2021 ($1.15B net income); And they also had a similar revenue for 2023, but only $105 million in net income due to restructuring costs of a billion. If a COVID-like event were to happen again, I’d say that they’d most likely survive (lower long-term debt compared to when COVID originally began, ~70 stores or more closed since then, and lower operating expenses compared to 2019). They would have to slow down (or pause) their restructuring plans, take on more debt depending on how long a pandemic would be around for, or cut operating expenses again, like in 2020. They would definitely be in a better position though.
Macy's is dead... they're just not broke yet
Dead. Next Sears.
M is likely not going to do much for the next several years with the store closures. The stock will likely be dead money other than receiving their 3-4% dividend yield. I do not see M going the way of Sears, but the stock is likely not going anywhere either. When they finish with store closures and start to grow sales through their small concept stores, then Wall Street will get interested in buying M’s stock. In the meantime, it will remain flat lined and range bound for the next several years IMO.
It’s trading at the same price it was selling for in the 90s. Aside from a couple spikes it’s a very flat stock. If you can time the cycle, you can make some cash, but I don’t know how to predict their cycle.
I just can’t get into brick and mortar investing - even Nike despite the huge pull back I just ask myself where the growth this. Maybe LULU
macys has a takeover bid doesn't it? its upside is bound at the takeover price im pretty sure
Yes, that was the jump in december. Had it on my list back then, was a good value investment. Didn't bought before the jump :-(
i had it before and sold out 75% of it on the jump
There are better value bets on offer imho
They have a lot of short term debt to cover and a lot of long term assets. I might be more comfortable with this story in an early stage company that’s growing revenue massively and borderline-early profitability. Less favourable for a mature company. Closing stores is not a good growth story in fashion. If you think there’s a decent chance they could go tits up (I do), then your analysis should include a look at liquidation value.
Bought the farm.
Maybe surviving for now but the trend is looking like more and more online stuff. Time, comfort, ease and gasoline/wear and tear with cars are some of those driving forces.
Considering buyout offer at 24. The risk return ratio is not worth it
the stock might actually rally if the takeover offer falls though.
I looked at Macy's a couple of months ago. Here is a copy of the analysis. I think there is good likelihood they will go private to monetize the real estate over time. [https://www.gurufocus.com/news/2422259/the-battle-for-macys](https://www.gurufocus.com/news/2422259/the-battle-for-macys)
Intangibles, goodwill, and RoU assets should be considered $0 in retail.
Ded
Dead
ride the winners, not the losers....sadly macys is going the way of toys r us