Macy’s, Inc. (M) Offers a Buying Opportunity for Long-term Investors: CEO


Terry Lundgren, the chief executive officer of Macy’s said the company is not just offering deals for clothing and other items on Black Friday, but also an opportunity to make money over the long-term

According to Lundgren, the recent challenges confronting Macy’s offer a buying opportunity for long-term investors.

Macy’s stock price is on sale

In an interview with Bloomberg, Lundgren emphasized that the shareholders of the company have been “rewarded handsomely and they will again.” He added, “Not only our sweaters are on sale, our stock price is on sale.”

Lundgren pointed out Macy’s consistently came back and outperformed the marketplace after experiencing challenges. The stock price of the company declined more than 40% over the past six months.

Challenges confronting Macy’s

In November 11, the management of the company expressed disappointment because its pace of sales did not improve in the third quarter. Macy’s was negatively impacted continued tepid spending of domestic customers as they focused on saving. Other consumers prefer to buy cars or spend their money on home-improvement.

Additionally, the strong dollar is affecting the financial performance of the largest U.S. department-store chain operator as tourists cut spending.

Macy’s reduced its 2015 earnings guidance in the range of $4.20 to $4.30 per share from $4.70 to $4.80 per share. The company also expected its comparable sales to decline by 1.8% to 2.2%.

According to Lundgren, the biggest challenge confronting Macy’s is mall traffic. The company is planning to close as much as 40 underperforming stores next year.

“Will those factors impact us forever? The answer is no. So for someone with a short-term focus, I totally get it and the impact you’re seeing here. But if you believe in the history of what we’ve been able to accomplish when our backs are against the wall, you’d bet on this company,” said Lundgren.

Lundgren is confident the Macy’s will overcome the challenges and return to its previous sales growth.

Market analyst Jeremy Skrezyna believes that the stock price of Macy’s could increase by 130%. They key catalyst for the stock’s potential upside is the company’ real estate assets (worth around $26 billion).

The stock price of Macy’s climbed nearly 2% to $40.38 per share on Wednesday.