Macy’s Stock Hits All Cylinders

Retail department store chain Macy’s (NYSE:M) the stock is still running in all cylinders posting double-digit revenue growth and exceeding pre-pandemic levels 2019. The company has gone through two years of digital transformation implementing the Polaris strategy to much success as it emerged from the pandemic as a better run of operations that added 7.5 million new buyers in Q4 2021 only. The company returned its dividends and also implemented a $2 billion buyback program after completing its current $500 million buyback program. Despite supply chain and inflationary pressures, the iconic brand continues to drive up and down line growth beyond analyst estimates. With the stock currently trading at just 5.7X forward earnings, the sell-off in the benchmark index provided value investors with an opportunistic rate of pullback to consider scaling to a position.

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Fiscal Year 2021 Earnings Release Fiscal Year Q4

On February 22, 2021, Macy’s released its fourth-quarter fiscal 2021 results for the quarter ended December 2021. The company reported earnings per share (EPS) of $02.45 excluding non-recurring items versus analysts’ consensus forecast for a profit of $1.99, beat $0. .45 per share. Revenue was up 27.8% year-on-year (YoY) to $8.66 billion, beating analyst consensus estimates of $8.45 billion. Same-store sales (SSS) were up 28.3% YoY and up 6.6% compared to 2019. Digital sales were up 12% YoY and 36% compared to 2019. Gross margin increased to 36.5%, up from 33 .7% in the same period last year. The company acquired 7.2 million new buyers in Q4 and generated $2.3 billion of free cash flow in 2021. The board of directors authorized a $2 billion share repurchase program after completing the current $500 million buyback and increasing the quarterly dividend by 5%. The company retired debt in 2021 which pushed its adjusted EBITDAR leverage ratio at the end of the year well below its 2.5X target.

CEO’s Comment

Macy’s CEO Jeff Genette stated, “Our results in the fourth quarter provide a strong end to a solid year. I am proud that Macy’s, Inc. exceeded expectations on quarterly top and bottom earnings in 2021, despite COVID-19-related disruptions, supply chain issues, labor shortages and rising inflation. Our business has momentum and serves more customers at more touchpoints on their shopping journey.” He continued, “Our team began large-scale work to transform Macy’s, Inc. two years ago when we launched the Polaris strategy, and today we believe the evidence is clear – our business is stronger, more agile and more financially sound. We are more digitally led and customer-centric and believe we are in a better position for sustainable and profitable long-term growth.”

Lifting the Fiscal 2022 Guidelines

The company raised its full-year fiscal 2022 EPS in a $4.13 to $4.52 range versus analysts’ consensus forecast of $4.02. Macy’s increased its 2022 revenue to between $24.46 billion and $24.70 billion versus consensus analyst estimates of $24.37 billion. This sees the three-year CAGR of owned plus licensed comparable from 1.1% to 1.4%.

Not Separating Digital Assets

The company determined that omnichannel combined with the acceleration of certain Polaris initiatives would deliver greater value to shareholders than separating digital and physical assets and to move forward as one fully integrated company. CEO Macy Gennette commented, “We are more confident in our move forward as an integrated company. The Board review reaffirms our belief that we are pursuing a robust strategy, and it gives us greater clarity on some of the initiatives that could be accelerated to unlock added value for our shareholders, which we are pursuing,” said Gennette. “Our team will continue our work to bring a bolder and brighter future to Macy’s, Inc. and all of its stakeholders, including our shareholders, colleagues and customers.”

M Opportunistic Pullback Price Level

Using rifle charts on the weekly and daily timeframes provides a precise view of the landscape for the M stock. The weekly rifle chart peaked abruptly near $37.98 Fibonacci Levels (fib). The stock continues to breakdown on full stochastic oscillations through the 20 band. The weekly gun chart downtrend stalled in the make or break with the 5 period moving average (MA) flat and the 15 period MA falling versus the weekly stochastic coil and mini pup attempts in the 20 band. The weekly 50-period MA support overlaps the $22.50, and the 200-period MA overlaps the lower weekly Bollinger Bands (BBs) at $19.98. Weekly low market structure (MSL) buy triggers on closing breakout above $27.35. The daily gun chart is in an increasingly tight range as BB compression caps the daily BB range at $27.84 and BB daily bottom at $23.15. The daily 5-period MA is at $25.49 with the 50-period MA at $25.78 and the 200-period MA at $23.36. Opportunistic pullback levels are at fib $22.50, fib $20.67, fib $18.84, fib $17.09, and fib $15.49. The upward trajectory ranges from the fib $28.41 upwards towards the fib $34.82 level.