On Thursday, Citi modified its stance on Macy's (NYSE:M) shares, reducing the price target to $16 from the previous $17 while maintaining a neutral rating on the stock. The adjustment follows Macy's reported slowdown in the second quarter, which differed from the performance of competitors such as Walmart (NYSE:WMT), Target (NYSE:TGT), and TJX Companies (NYSE:TJX).
The department store chain experienced a significant miss in its comparable store sales expectations as the quarter progressed. Management at Macy's had anticipated a challenging environment but acknowledged that the situation had deteriorated more than expected. This downturn is seen as indicative of broader, ongoing challenges within the company.
Macy's strategy to counter these challenges includes a planned reduction of its physical store presence by closing 150 stores over the next three years. Despite these efforts, the retailer is struggling to distinguish itself in a market where consumers are increasingly seeking value and are more likely to shop with off-price and mass merchants.
The company's market share and sales base are diminishing more quickly than anticipated, which is a cause for concern. The current trading value of Macy's stock is around three times the firm's estimated EBITDA for fiscal year 2024, and the stock has been under considerable pressure.
Given these circumstances, Citi suggests that shareholders may advocate for renewed engagement with Arkhouse, referencing a previous buyout offer of $24.80 per share reported on July 3, 2024.
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