Macy's (M) will report fiscal first quarter results tomorrow morning and host a call at 9:30 AM.
Macy's is in a much better position than it was one year ago. Department stores still face a challenging environment as eCommerce eats in to traffic at the malls (Bon-Ton Stores recently filed for bankruptcy), but Macy's is taking encouraging steps to right-size its assets. Macy's continues to rationalizing its store base and monetize valuable real estate assets.
In late February, the company reported better than expected fourth quarter results. Fourth quarter earnings grew 40% to $2.82/share as same store sales grew 1.3%, the first positive comp in three years. What's more, inventories fell 4% year-over-year.
Macy's guided for fiscal 2019 EPS of $3.55-3.75, including ~$1/share in asset sale gains, with same store sales flat to up 1% year-over-year.
First quarter earnings are expected to grow 46% to $0.35/share with comparable store sales up just under 1%.
The macroeconomic backdrop is providing a nice tailwind for the retail sector. This morning, the U.S. Census Bureau reported April retail sales grew 4.8% in April and 5.5% in March. However, retail sales at department stores fell 1.6% and 1.2% over that period.
Macy's stock still trades at a notable discount to most retailers. With a $9.1 billion market cap, Macy's trades at just over 8x earnings with a $13.7 billion enterprise value just over 5x EBITDA estimates. A broad group of publicly traded retailers trade at ~16x EPS and ~8x EV/EBITDA. Higher end department store Nordstrom (JWN) trades at just over 14x EPS and 6x EV/EBITDA.
Macy's stock has been straddling the $30 level since breaking out to a one-year high following fourth quarter results.