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TD Cowen changed its position on Macy’s shares on Thursday, downgrading the stock to Market Perform from Outperform and reducing its price target to $20.00 from $23.00.
The retail giant, known for its department stores, is undergoing significant changes, including the closing of 150 locations. Instead, it is expanding into the luxury segment with 30 new Bluemercury stores and 15 Bloomies, as well as increasing its small format stores by 30 units.
The company recognized the positive steps Macy’s is making, such as strategic store adjustments, growth in the luxury market and improvements in private label and inventory management.
Despite these strategic moves, the company stressed that realizing the benefits resulting from these changes will take time. He also highlighted several challenges that could limit the stock’s near-term growth potential. This includes the company’s comparable sales (comp) guidance, which remains less than encouraging despite a resilient consumer environment.
Another concern for Macy’s is the potential for increased credit card losses, which could impact its financial performance.
Additionally, the retailer faces the critical task of becoming more relevant to younger consumers, a demographic that is vital to retail’s long-term success but has been elusive to many traditional department store chains.
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