Macy’s Stock Up 2x, What’s Next?
Trefis TeamContributor Great SpeculationsContributor Group 2021.01.27 Forbes A Macy's store is seen on the day the company announced it is furloughing most of its 125,000 employees because of the ongoing coronavirus pandemic, which has sunk sales, and forced the closing of stores.
SOPA IMAGES/LIGHTROCKET VIA GETTY IMAGESMacy’s stock (NYSE: M) at around $13 has partially reached the level it was at before the drop in February 2020. During the coronavirus pandemic, the retailer became vulnerable due to its high operating costs, mall-based locations, and nonessential product assortment. While the stock is still down 24% from levels seen since the beginning of 2020, it has moved a strong 2x since November, thanks to the vaccine-related boost. That said, we believe that the stock could decline going forward in the medium to long term. A large debt burden of close to $5.4 billion, declining sales trends in the last few years, and an uncertain future of most of its stores located in malls - will likely add to its difficulty for a recovery back to pre-Covid levels of around $16. Our conclusion is based on our detailed comparison of Macy’s stock performance during the current crisis with that during the 2008 recession in an interactive dashboard analysis.