By Tonya Garcia, MarketWatch
Macy’s Inc. is expected to announce fourth-quarter earnings on Tuesday.
Even a major player like Macy’s /quotes/zigman/467976/composite M +2.52% isn’t immune to retail’s struggles. The sector is experiencing a dramatic shift to e-commerce and changes in consumer tastes and shopping behavior that have put pressure on department store earnings, and on the industry as a whole.
Macy’s has already announced 100 store closures and thousands of job cuts, in addition to a reassessment of its real-estate assets. Now there’s buzz from reports about buyout talks with Hudson’s Bay Co. /quotes/zigman/12770516/delayed CA:HBC +1.69% , parent to Lord & Taylor and Saks Fifth Avenue.
Macy’s shares have an average hold rating with a price target of $36.33,14.2% higher than Thursday’s close of $31.82.
Here’s what to expect:
Earnings: Analysts polled by FactSet expect earnings per share of $1.95, down from $2.09 the year before.
Estimize, a software platform that crowdsources estimates from buy-side analysts, hedge-fund managers and others, sees EPS of $1.98.
Revenue: FactSet analysts see sales of $8.61 billion, down from $8.87 billion last year.
Estimize sees sales of $8.57 billion.
Macy’s announced in early January that same-store sales on an owned-plus-licensed based fell 2.1% in November and December 2016 combined.
Share price: Macy’s shares are down 19.7% for the past year, and are down 25.2% for the last three months. The S&P 500 index is up 7% for the past three months.
Other issues: While e-commerce sales have been growing, reaching about 20% of total retail sales according to the latest Fitch numbers, the majority of sales are still happening at physical stores, a big reason not to dismiss them as relics.
“Beyond Amazon /quotes/zigman/63011/composite AMZN +2.14% , much of the e-commerce share gains have been made by chains with a physical presence, like Wal-Mart /quotes/zigman/245476/composite WMT +0.60% , Macy’s and Best Buy /quotes/zigman/219712/composite BBY +1.70% ,” Fitch wrote in a note published Wednesday. “These companies have been able to leverage their existing brand identity, inventory position, and free cash flow generation to develop robust online businesses.”