Macy's is facing an 'uphill battle'

  • Morgan Stanley is bearish on Macy's after research showed continued declines in same-store sales and return-on-capital investments. 
  • Macy’s reliance on private-label credit-card income and real-estate gains has been hiding the deterioration in its core business.
  • Watch Macy's trade in real-time here.

Macy's proved it might survive the retail apocalypse after exceeding expectations during its last quarterly earnings report. However, the risks now outweigh the rewards as share prices have risen 61% since October and Morgan Stanley's research shows continued declines in same-store sales and return-on-capital investments. 

"Post Q1, 2018 could be an uphill battle," Morgan Stanley analyst Kimberly Greenberger wrote in a note to clients. She downgraded the stock to "underweight" and lowered her 12-month price target to $25 from $27.

8 PHOTOS
8 great ways to save more at Macy’s
See Gallery
8 great ways to save more at Macy’s

1. Sign up for a Macy’s credit card 

Two credit cards offer Macy’s benefits: a store credit card and an American Express card with the Macy’s brand. The more you spend at Macy’s with these cards, the bigger the benefits.

For example, sign up for the Macy’s store card, and you’ll get these benefits based on your annual spending:

  • Spend up to $499: Save 25 percent on any day you choose with Star Passes; earn 1 point per $1 spent in the Plenti Rewards program
  • Spend $500 to $1,199: Free shipping; a birthday offer
  • Spend $1,200 or more: 5 percent back in rewards

The American Express card comes with even more benefits. Check out what you can get at the Macy’s website.

(Daniel Acker/Bloomberg via Getty Images)

2. Shop through Ebates

Stop by a cash-back website such as Ebates before shopping at Macy’s, and you will earn a return on your purchases. For example, Ebates recently offered 6 percent off for people who shopped at Macy’s online, and an additional 5 percent off for those shopping in-store. 

Read more about how to use Ebates in “How to Earn Extra Money by Doing Things You’re Already Doing.”

(Photo by Kena Betancur/VIEWpress/Corbis via Getty Images)

3. Grab discounted gift cards

Buying gift cards at a discount can save you cash on all your Macy’s purchases. For example, we’ve seen Cardpool list Macy’s gift cards that were discounted up to 7 percent. Raise recently listed Macy’s gift cards for up to 3.5 percent off.

A comparison website called Gift Card Granny will tell you which marketplace is selling a specific retailer’s gift cards for the lowest price. So, always visit Gift Card Granny before buying a discounted gift card.

Worried about buying “used” gift cards? Some sites, like Raise, guarantee them.

It's not the usual blah, blah, blah. Click here to sign up for our free newsletter.

(Daniel Acker/Bloomberg via Getty Images)

4. Wait for the One Day Sale

Each month, Macy’s typically offers a One Day Sale. Ebates says this sale typically takes place during the third weekend of the month, but the timing can vary. For example, December’s sale occurred in the first week. Ebates says this sale “has the best savings,” and advises:

Clearance items will be marked down further and usually there will be a coupon to stack on top of that. If possible, wait until the One Day Sale each month to get the best savings.

(REUTERS/Brendan McDermid)

5. Join Thanks for Sharing

Each year between September and December, Macy’s offers its Thanks for Sharing program. Enroll in the program with a Macy’s credit card, and you’ll be charged $25.

Then, begin shopping. All purchases from the day you join to Dec. 31 qualify for 10 percent back in the form of a Macy’s gift card that you’ll receive in February.

Even better: Macy’s will take $10 of your enrollment fee and donate it to a charity such as the American Heart Association, the Breast Cancer Research Foundation, Make-A-Wish and more.

(REUTERS/Brendan McDermid)

6. Stop by the Deals and Promotions page

Macy’s advertises its best offers on its Deals and Promotions page. Recent examples of coupons on this page include:

  • An extra 30, 25, 15 or 10 percent off select items
  • 25 percent off select Michael Kors styles
  • Free beauty gifts

Check the page often because you never know what savings may appear.

(Photo by Jonathan Elmer/Bloomberg via Getty Images)

7. Sign up for emails and texts

To stay up-to-date on the latest Macy’s deals — and one step ahead of your shopping competition — sign up for emails and texts from the retailer. For joining the list, you’ll get 25 percent off your next purchase. Sign up at the Deals and Promotions page.

(REUTERS/Mike Segar)

8. Take advantage of price adjustments

Sometimes, you find what you think is an incredible bargain — only to discover a week later that the price has fallen again. With Macy’s, that’s no problem. The retailer will adjust the price on sale items within 10 days of your in-store purchase or online order.

Rules vary for some items, so make sure to check out the adjustment webpage.

(REUTERS/Mike Segar)

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

While Macy's is closing stores to adapt to a new retail-industry environment, Greenberger warned the negative store-only comps (comparative same-store sales) hint the company isn't moving fast enough. She predicts the trend will only continue. 

Greenberger, who remains cautious on the retail sector as a whole, also points out that Macy’s reliance on private-label credit-card income and real-estate gains has been hiding the deterioration in its core business. She says the company's core-retail operating profit has declined 63% since 2014. 

Macy's has been battling declining sales and competition from e-commerce for years. The overall decline in American mall traffic has hurt the retailer further, forcing it to announce the closure of up to 100 stores around the country. In recent months, the company launched efforts to better combine its online and in-store services and become more of a discount store to attract customers. 

Macy's is up 11% this year. 

NOW WATCH: Why you should never release your pet goldfish into the wild

See Also:

Read Full Story