Stock Analysis & Valuation Macy's, Inc. (FDO.DE)

• Previous Close: €14.14
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	11.60	-18
Graham Formula	8.40	-41

Strategic Investment Analysis

Company Overview

Macy's, Inc. (FDO.DE) is a leading American department store retailer listed on the Deutsche Börse (XETRA). Headquartered in Cincinnati, Ohio, Macy's operates in the highly competitive consumer cyclical sector, specializing in apparel, accessories, cosmetics, home furnishings, and other consumer goods. With a workforce of 130,000 full-time employees, the company serves a broad customer base through its extensive product range, including private label brands like Alfani, Charter Club, and Hotel Collection. Macy's also benefits from its subsidiary, FDS Bank, which handles credit processing and customer service for its credit card operations. The company's omnichannel strategy combines physical stores with e-commerce, catering to evolving consumer preferences. Despite challenges in the retail sector, Macy's maintains a strong brand presence and a diversified merchandise portfolio, positioning it as a key player in the U.S. department store industry.

Investment Summary

Macy's presents a mixed investment profile. On the positive side, the company boasts a well-established brand, diversified product offerings, and a solid omnichannel strategy. With a market cap of approximately €3.9 billion and revenue of €23 billion, Macy's remains a significant player in the retail sector. However, the company's high beta of 2.19 indicates substantial volatility, reflecting sensitivity to economic cycles. While Macy's generated a net income of €582 million and an EPS of €2.07, its total debt of €5.7 billion raises concerns about financial leverage. The dividend yield, supported by a €0.32188 per share payout, may appeal to income-focused investors, but the competitive pressures from e-commerce giants and shifting consumer trends pose long-term risks. Investors should weigh Macy's brand strength against sector headwinds and debt levels.

Competitive Analysis

Macy's operates in the highly competitive department store sector, facing pressure from both traditional rivals and e-commerce disruptors. The company's competitive advantage lies in its strong brand recognition, extensive private label portfolio, and omnichannel retail strategy, which integrates physical stores with online shopping. Macy's also benefits from its credit services through FDS Bank, enhancing customer loyalty. However, the rise of fast-fashion retailers and online giants like Amazon has eroded market share. Macy's has responded by optimizing its store footprint and investing in digital capabilities, but its mid-tier positioning leaves it vulnerable to premium and discount competitors. The company's scale allows for cost efficiencies, but its debt load could limit flexibility in pricing and promotions. To maintain relevance, Macy's must continue differentiating through exclusive brands, personalized shopping experiences, and seamless online-to-offline integration. The competitive landscape demands constant adaptation, and Macy's ability to balance tradition with innovation will be critical to its long-term success.

Major Competitors

• Kohl's Corporation (KSS): Kohl's is a key competitor with a focus on value-oriented apparel and home goods. Its smaller store format and localized assortments provide agility, but Kohl's lacks Macy's upscale brand portfolio. Kohl's has struggled with declining sales, but its partnership with Amazon for returns could drive foot traffic. Unlike Macy's, Kohl's has a less prominent online presence, which may limit its competitiveness in e-commerce.
• Nordstrom, Inc. (JWN): Nordstrom competes at the higher end of the market, emphasizing luxury brands and superior customer service. Its Nordstrom Rack division targets value-conscious shoppers, overlapping with Macy's mid-tier positioning. Nordstrom's strong e-commerce platform and loyalty program give it an edge, but its smaller scale compared to Macy's may limit pricing power. Nordstrom's focus on premium experiences differentiates it but narrows its customer base.
• Amazon.com, Inc. (AMZN): Amazon dominates online retail, pressuring Macy's with vast selection, competitive pricing, and fast delivery. While Amazon lacks physical department stores, its acquisition of Whole Foods and expansion into apparel pose a growing threat. Macy's cannot match Amazon's logistics network or tech-driven personalization, but its in-store experiences and private labels offer differentiation. Amazon's scale and innovation make it a formidable long-term challenger.
• Target Corporation (TGT): Target's success in blending affordable fashion with essentials has drawn shoppers away from traditional department stores. Its strong private label strategy (e.g., Cat & Jack) competes directly with Macy's offerings. Target's smaller-format stores and robust same-day delivery options provide convenience, but its apparel selection lacks the depth of Macy's. Target's consistent performance and clean stores give it an edge in attracting younger demographics.
• J.C. Penney Company, Inc. (JCPNQ): Once a major rival, J.C. Penney's bankruptcy has reduced its competitive threat. Its focus on middle-income shoppers and frequent promotions once made it a direct competitor, but operational missteps and financial troubles have diminished its market position. Macy's has capitalized on J.C. Penney's decline, but the latter's ongoing restructuring could lead to renewed competition in value segments.