About that resilient consumer and the tremendously low unemployment rate of 5%, maybe someone should tell Macy’s why their sales and profits continue to plummet. Their stock is down 13% today to a three year low of $40. It has fallen 45% in the last four months. It seems the market doesn’t like it when your sales fall 5.2% over last year and your profits crash by 46%. And this is after you close a bunch of your worst performing stores. I have a feeling they might be announcing the closure of another 100 stores after this upcoming disastrous Christmas season.
It was interesting that when I looked for their earnings announcement link on Marketwatch, it was no where to be found. So I went to their website, and now I know why they don’t want the results too widely viewed. It’s much worse than the headlines reveal. When you examine their balance sheet and cash flow statement, you see the looming disaster on the horizon. The executives running this retail titanic might be the dumbest fuckers on earth.
Let’s examine their brilliant strategic moves:
- They have burned through $574 million of cash in the last year.
- Despite sales FALLING by 5.2%, these idiots have increased their inventory 4.6% or $356 million. Get ready for some 80% off sales at Macy’s. That should do wonders for margins.
- They have increased their short term debt by $781 million. That means they owe that within the next year, while only having $474 million of cash on hand. And this is while entering a holiday season guaranteed to be awful.
- This company has more than double the amount of debt to equity.
- And now for the cherry on top. The greedy blithering idiot CEO of this sinking ship borrowed money to buy back 31.6 million shares at an average price of $57 per share. He bought back $1.8 billion of stock in order to boost EPS and his own executive compensation. As I mentioned earlier, the stock is at $40 today. He lost $537 million of shareholder money with this inexplicably idiotic move. And this was after buying back $1.5 billion of stock in the previous year. This dude deserves a big fat fucking raise.
The CEO’s of retailers in this country must be the dumbest, greediest, most short sighted motherfuckers on the planet. Bricks and mortar retailing has been in decline since 2007. Anyone who can’t see that is either blind, stupid, or a graduate of an Ivy League business school. Macy’s, Sears, and Penny’s are toast.
They can buy back stock, advertise, offer 60% off sales, give away coupons, or whatever other bullshit they learned over the years. It’s all for naught. They are dead retailers walking. If they want to survive, they should conserve cash, close their 30% worst performing stores and settle for being a niche player. It won’t happen. The egos of these dumbass retail CEOs won’t allow them to see the truth. They will take these retail titanics to the bottom of the sea.
Here in Mpls we had Dayton’s (Gov is Mark Dayton – heavily drugged) Dept Stores. Sold to Marshall Fields, then became Macy’s.
Just cheap shit. They use a price list with a 70% margin, then discount 50% off that – to make it seem like you’re getting a deal.
Things are even worse than Admin says.
Actual photo of folks practicing for this year’s Macy Thanksgiving Day Parade;
[img
[/img]
My mother used to be pretty high up in the fashion business ( 1950 – 1980 ). She went to Paris, Milan, etc. I’ve heard a lot of stories.
At one time these department stores were all separate entities. Not any more. By 1970, most were having problems. Holding companies (like Federated) bought them, then consolidated the stores. All that is left is the name. Sorta like slapping a Cadillac emblem on a Chevy and calling it an Escalade.
So what is a department store? Well it’s nothing more than a line of credit. Corporate borrows a couple of $ billion, buys shit from China, then sells it, and turns a 5% profit.
All these department stores are owned by just a few corporations:
Federated owns: Macy’s, Bloomingdale’s, I. Magnin (defunct), Stern’s (defunct), Marshall Field’s (defunct), Filene’s (defunct) and some others involving the Macy’s name. Founded in 1929, operates 465 stores. Federated acquired May Department Stores in 2005 for $11B. The company changed its name to Macy’s in 2007.
Hudson Bay owns: Lord & Taylor, Saks Fifth Avenue.
Neiman Marcus and Bergdorf Goodman are owned by Warburg Pincus.
I’d be more interested in seeing total retail sales figures for the United States than individual retail store sales.
I.m wondering how much the internet has affected traditional store sales, whether overall sales are up, down, or about the same when everything is added in.
This is good news for Macy’s – they deserve it for cutting ties with Trump clothing cuz the stupid owners didn’t agree with his politics.
Hurray – go to zero you stupid fucks.
Well said sir, you should be a consultant
Thirty years ago I loved JC Penny’s and Sears. All my tools were from Sears and just about everything else from Penny’s.
Who’s the fuck that voted down?
Investors fear Macy’s is a red flag for other retailers
By Tomi Kilgore
Published: Nov 11, 2015 2:04 p.m. ET
Estimated retailer earnings growth has dropped to 3% from nearly 8% in the last several months, according to Retail Metrics
Retailer stocks took a broad beating Wednesday, after disappointing results from Macy’s Inc. fueled growing fears that the sector suffered through some tough times in the latest quarter.
The SPDR S&P Retail exchange-traded fund XRT, -1.86% dropped 2.1% in afternoon trade, as 90 of its 102 components traded lower. The ETF has lost 7.7% over the past three months, while the S&P 500 index SPX, -0.10% has eased 0.2%.
FactSet
Macy’s stock M, -14.34% plunged 15%, putting it on track to close at the lowest level since February 2013, after the department-store chain reported fiscal third-quarter total and same-store sales that missed expectations. It blamed weak spending by domestic customers in key categories as well as a slowdown in buying from international tourists at its Macy’s and Bloomingdale’s stores.
The company said it decided not to spin off its real estate properties into a real-estate investment trust.
Macy’s was among the first major retailers to report results for the quarter ended in October, as sector heavyweights such as Wal-Mart Stores Inc. WMT, -1.70% Target Corp. TGT, -2.91% Home Depot Inc. HD, -0.21% and J.C. Penney Co. JCP, -1.90% are slated to reveal results in the coming week.
The dismal earnings also could put more attention on the government’s report of October retail sales, due Friday.
“Jittery investors are anxiously awaiting third-quarter earnings and revenue numbers as well as guidance on the key fourth-quarter holiday selling period,” analysts at industry research company Retail Metrics wrote in a note to clients.
Expectations for year-over-year earnings growth for the sector have fallen drastically over the last few months to 3.0% from nearly 8% as of July 1, according to Retail Metrics, citing concerns over a tepid retail environment and a prolonged period of unseasonably warm weather, which has damped demand for cold-weather apparel and merchandise.
That compares with growth of 7.3% in the fiscal second quarter and 10.2% in the first quarter.
National Oceanic and Atmospheric Administration
“Given the recent surprise history of department stores coupled with unseasonably warm weather and sluggish mall traffic we would note that potential for surprise to earnings, same-store sales and revenues is to the down side for the group,” analysts at Retail Metrics wrote.
J.C. Penney’s said early Wednesday that earnings and same-store sales growth for the latest quarter were above expectations, but the stock fell 2.1%, after the company said it offered to pay $50 million as part of a settlement of a false-advertising class-action lawsuit.
Among fellow department store chains, shares of Kohl’s Corp. KSS, -5.44% slumped 6.2%, Dillard’s Inc. DDS, -7.24% dropped 6.8% and Sears Holdings Corp. SHLD, -4.70% shed 3.5%.
Kroger Co. shares KR, -0.56% slipped 0.6% after the company said it reached a deal to buy fellow grocer Roundy’s Inc. RNDY, +64.22%
In other more active retailer stocks, those of Wal-Mart slid 1.8%, Target shed 2.9%, Gap Inc. GPS, -2.11% dropped 2.3% and Dollar General Corp. DG, -3.86% lost 3.7%.
It’s so bad for Macy’s that they’re reconsidering their State Street location here in Chicago (the former Marshall Field’s):
http://www.chicagobusiness.com/article/20151111/NEWS12/151119968/macys-rethinks-state-street-flagship?utm_source=NEWS12&utm_medium=rss&utm_campaign=chicagobusiness
Jesus, even Dollar General dropped. Where are people getting necessities, food banks? This is going to be an interesting Christmas season for the retailers. At least NOAA is on top of the situation.
Macy’s Massacre – 3 Years Of Wasted Buybacks Ends Financial Engineering Dreams
Submitted by Tyler Durden on 11/11/2015 13:55 -0500
Macy’s is down over 13% today, pushing towards a sub-$40 handle – the lowest since February 2013 – after lowering guidance and disappointing a market full of hope (and hype) that retail is back (remember, all the retail hiring last Friday). However, that is not the most prescient issue as 3 years of buying back billions of dollars of Macy’s stocks – to financially-engineer earnings to ensure executive compensation is satisfactory – have been completely wasted. And worst still, the additional debt added to fund the total failure in timing of buybacks has now sent Macy’s credit spiking to multi-year highs (as the stock tumbles).
“No Brainer” – Macy’s actually increased their buyback pace last quarter alone – spending $900 million on stock at an average price of $53.89, a loss of $230 million of that “investment”
Now what? This is the clear message that executives in every credit cycle – there is a limit to the largesse with which you can abuse bondholders in the name of levitating share prices amid a dismal reality.
As we detailed previously, if you needed further proof that US equity markets have become the preferred channel for transferring debt sale proceeds directly into the pockets of top management, Bloomberg has all the evidence you need. Here’s more:
Buybacks and dividends are rising to records in the U.S., and for many chief executives, that means a fatter pay check — even if sales aren’t growing.
Eleven of the 15 non-financial U.S. companies that spent the most on buybacks last year base part of CEO pay on earnings per share or total shareholder return, or both, according to data compiled by Bloomberg. These metrics get a boost when businesses return cash to investors, giving companies like International Business Machines Corp. and Cisco Systems Inc. added incentive to dole out cash to stockholders.
Linking compensation to buybacks and dividends can encourage managers to sacrifice funds that could be used for long-term investments, economist William Lazonick said. It also raises the prospect that executives are being paid for short-term returns rather than running a business well.
Tying pay to performance has long been considered a shareholder-friendly move that gives executives an incentive to ensure that the company is on solid footing. Investors such as Warren Buffett have applauded payouts when they consider shares to be undervalued. Large pension funds have welcomed pay incentives, like when Walt Disney Co. in 2013 changed the way it calculates CEO Bob Iger’s stock awards.
Yet dividends and buybacks can prop up per-share earnings and total shareholder return — lifting CEO pay as a result — even in cases where sales are falling.
The focus on shareholder value has “led to this really corrosive feedback loop between executive compensation and corporate behavior,” said Nick Hanauer, co-founder of venture capital firm Second Avenue Partners LLC. “When everyone around a board room can justify essentially any behavior to generate a higher stock price, no stone shall go unturned.”
Average CEO compensation for the top 350 U.S. firms by revenue has climbed to $16.3 million last year, according to data from the Economic Policy Institute. That’s up from $15.7 million in 2013.
Overall in 2014, non-financial companies returned almost $1 trillion in share repurchases and dividends. As a percentage of gross domestic product, that’s among the largest payouts on record.
Not all investors are applauding the bonanza.
Amid a bull market, shareholders may not be as concerned as they should about the potential boost that buybacks and dividends can give to CEO pay, said Robert Barbetti, head of compensation advisory for J.P. Morgan Private Bank in New York.
“Boards and compensation committees should be thinking very carefully about the incentive plans and objectives that work long term.”
As BloombergView followed up today, there is simply no question who really benefits in the end from management’s exuberant buybacks: Why Management Loves Buybacks
According to RAFI’s study, U.S. companies issued stock equal to $1.2 trillion last year. All told the new issues in 2014 exceeded share buybacks.
The RAFI study also found that “the cash flow statement often fails to report the majority of a company’s stock issuance.” Much of that unreported issuance is used as compensation for employees, primarily management. “When management redeems stock options, new shares are issued to them, diluting other shareholders” the report further notes. “A buyback is then announced that roughly matches the size of the option redemption. This facilitates management’s resale of the new stock.”
The conclusion is that what looks like buybacks are actually thinly veiled management-compensation plans, or in RAFI’s words, “simply a mirage.”
The poorly disclosed compensation structure is only half of the problem with buybacks. Timing and pricing are another big issue… as we showed above.
As Bloomberg concludes, the bigger question is simply this: Why is management at so many companies bereft of better ideas and more productive uses for corporate cash?
Maybe it’s because so much of the proceeds of buybacks end up in their own pockets.
* * *
Some of you know I recently bought a used Prius Plug-In. I love the car, but it had a slow leak in the right front tire…a couple of pounds loss per day. So last Sunday I figured I better get it fixed before something bad happens, so I call around town to the usual suspects (Firestone, Pep Boys) and they’re booked solid. So I thought, maybe the local Sears store at the mall has an automotive dept. Drove around to the back of the mall and voila, they DO have an automotive department….and only one car in the entire shop, all the other bays were empty, grease monkeys just sitting around.
They got right on it, but long story short, the hole in the tire had already been plugged but was too big for the plug (thus the leak). Bottom line, new tire and $109 out the door.
I couldn’t believe they were that dead in the middle of a weekend day.
Perhaps in the future, people will fly surveillance drones through abandoned macy stores like they did when they explored the Titanic. “Look, an intact set of China on display” “The dust is nearly an inch thick in some places, while other places look like they were just cleaned”
“They can buy back stock, advertise, offer 60% off sales, give away coupons, or whatever other bullshit they learned over the years. It’s all for naught. They are dead retailers walking. If they want to survive, they should conserve cash, close their 30% worst performing stores and settle for being a niche player. It won’t happen. The egos of these dumbass retail CEOs won’t allow them to see the truth. They will take these retail titanics to the bottom of the sea.”
My take? These higher end expensive stores sell really crummy China stuff.
I have been threatened before (in a Kohl’s) for a perceived skip in line/new cashier arrived
and directed people to her counter. Kohl’s sells lower end stuff actually. Regardless,
malls and stores/parking lots are no longer safe. CEO types may steal the company money
but safety and overpriced China stuff are contributing to a loss of sales.
Avalon is in for some loving tonight!
Macy’s, Sears, and Penney’s sale absolute crap with poor customer service. Dillards, Nordstrom, and Belk are the only decent middle class dept stores left that I know of — although I may be missing some regional. I’m no fan of Kohls but who would pay Penneys prices when Kohls exists. And then Sears sells clothes that will fall apart at first wash (except for Lands End) and they no longer make their tools in America and it shows — so why go there. As for Macy’s, try finding a clerk or open register to buy their constantly on clearance crap with coupons that only work on certain items.
Maybe people are catching on to trying to fill the holes in their lives with Knicky Knacky Crappy? The homes of people are filled to the gills with consumer shit and it is nearly all so worthless that it is all throw away. Appliances, tools, electronics, etc. when it quits working, you toss the shit. Everything is garbage.
My wife has accounts from here to the Philippines and gets a Macy’s flyer every other day. I would never go into a store that has a huge commie star logo even if it was cheaper than a thrift store that also sold day old bread, dented cans and gave out hooker discount coupons.
Jim,
You may be interested in an anecdote I heard today. Target Corp is based here in Minneapolis. They laid off a boatload of people six months ago after their debacle of venturing into Canada big-time and then pulling the plug on Canada only a year later. Well apparently a lot of the people they laid off at the downtown Mpls center (high salaried management in many cases) have already been hired back. If fact, some of them are getting severance pay checks PLUS new salary pay checks after having had the summer off.
Didn”t macy’s drop it’s donald trump line over the summer. The stupid, it burns
I paid of my balance and shredded my Macys AMEX card. I had shopped there for over two decades. I will no longer purchase anything from this store or Target. Why. They were the supporters of the Supreme Courts ruling on Gay Marriage. Yes they support Sodomite behavior. So they pander to 1.5 percent of the Adult Gay population, while ignoring the 98.5 percent of the consumers with the money to keep them in business. Just Say No To Macys and Target. Looser stores who deserve to go out of business.
I left some things out on the above post.. Sears, JC Penny’s, Staples, Office Max and Office Depot., add them to the list of “Looser stores” who support the destruction of America by tearing Families apart by supporting stupid- a*s Supreme Court rulings on Gay/Sodomite Marriage. Oh yes, lets not forget Target Pushing Beneficial Dog Food laced with Chinese Anti-Freeze. And they don’t even care.
I almost lost our Family Dog from that. Don’t believe it. Do some research. It’s all there for everyone to see. They all suck, have crappy customer service and need to go out of business. I got along just fine before they came to town and will do just fine when they close shop.
they are all imploding because of there progressive anti traditional policies, as for Macys it should go out of business for what it has said and done against traditional families who make up most of there business. you want sodomite behavior Macys then you will go down with the ship.
That is what they get for pissing off the Trumpster and his supporters.
Macy’s is a nice store but you can get things cheaper on the internet. Most of what you need. It should be selling either very wanted items, higher-end stuff, or mostly clothes and shoes and very carefully selected.
I don’t shop at Macy’s anymore and have not for a while. It used to be a nice place and had quality merchandise. Now the stores are messy and dirty and the fitting rooms stay trashed with clothes on the floor, ect. They have all those damn vouchers and silly extra points. That huge red star looks like something to do with the Nazi concentration camps. It was bad energy all the way around. The greed and power crazed ceo’s are killing this country.