Macy's Inc (NYSE:M) will look to extend its turnaround efforts on Wednesday as investors await first-quarter results before market open that show a return to modest sales growth.
Analysts expect the department store giant to report Q1 revenue of $4.61 billion, essentially flat with the $4.6 billion reported a year earlier, according to Benzinga Pro. Macy’s has topped Wall Street revenue estimates in each of the last four quarters and in six of the past 10.
But earnings are projected to come in at 2 cents per share, down from 16 cents per share in the year-ago quarter. Despite the expected decline, Macy’s has beaten analyst earnings estimates for 19 consecutive quarters.
Key Items to Watch
More attention could be placed on Macy's for this quarter than in recent quarters, thanks to a new investor.
Berkshire Hathaway (NYSE:BRK)(NYSE:BRK) unveiled a new position in the retailer recently with the conglomerate buying 3,038,355 shares of Macy's in the first quarter.
The position is relatively small for Berkshire, which is now led by Warren Buffett's successor Greg Abel. The Macy's stake was valued at $55 million at the end of the first quarter, Berkshire's 27th largest investment position.
Investors will be closely watching Macy's Q1 report and future filings from Berkshire Hathaway to see whether it raises its stake in the retailer.
Macy's Shows Strength In Several Areas
In Q4, Macy's saw overall sales down 1.7% year-over-year to $7.6 billion, with comparable sales up 1.8% year-over-year.
The company cited macroeconomic and geopolitical risks as concerns that could hurt future consumer spending and the company's future results.
Analysts and investors will be closely watching sales and management commentary to see whether the caution remains or the company is more bullish going forward.
Macy's turned down a $6.9 billion, $ 24.80-per-share buyout offer in 2024 amid pressure from activist investors who wanted changes such as monetizing the company's real estate portfolio.
Several activist investors remain with the company and could mount another push to prompt changes going forward. Berkshire is not known for its activist investing. With a new CEO, Abel could publicly support other large shareholders in their efforts.
Price Action
Macy's stock is up 1.5% to $22.13 on Tuesday versus a 52-week trading range of $10.54 to $24.41. Its shares are up 0.4% year-to-date but have surged over 15% in the last month, driven by the unveiling of the Berkshire stake. The retailer’s stock trades close to a three-year-high, a level that could be reached with strong earnings.
Photo: JHVEPhoto / Shutterstock.com
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