Macy's Backstage should take center stage, this analyst says.
Full-price department stores are going away, so Macy’s Inc. should shift focus to its Backstage off-price brand, says CFRA’s Camilla Yanushevsky.
“I don’t think we see the limit yet in Backstage,” said Jeff Gennette, chief executive of Macy’s on the call, according to a FactSet transcript. “We see Backstage could play in every single one of our Macy’s mall footprints and we’re looking very carefully at free-standing as well.”Department stores have struggled with iconic names like J.C. Penney Co. Inc. JCP, -2.70% trying to hang on as business goes elsewhere.
“[T]here’s a lot of runway for off-price at Macy’s and we’re very bullish about the future of our Backstage business,” said Price. “We came away from the Q3 call with even greater conviction in our bullish thesis on off-price and TJX specifically,” wrote Roxanne Meyer, managing director at MKM Partners in a Wednesday note about TJX. “The key to our thesis, which is top-line driven, is that we believe inventory access only gets better from here, which should support ongoing apparel growth and thus fuel upside potential.”Ross Stores Inc. ROST, +1.22% is scheduled to report third-quarter earnings Thursday after the bell.
Saunders says Macy’s has a number of locations that are “hard to navigate and do not meet the needs of the modern consumer in terms of services.” Moreover, the merchandise is “hit or miss.” BJ’s Wholesale Club Holdings Inc. BJ, -8.06% , which is down 6.4% in Thursday trading after reporting a third-quarter sales miss and cutting its guidance, also said the weather was a headwind.
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