Investment banking firm Goldman Sachs has downgraded Macy’s stock from “buy” to “neutral.”
According to a research note issued Friday, the group’s analyst price target was lowered from $66 to $42, indicating a risky venture.
The note came three weeks after the department store retailer reported that its third-quarter sales fell 5.2% to $5.87 billion and that comp-store sales had sunk by 3.9%.
“We are disappointed that the pace of sales did not improve in the third quarter, as we had expected,” Terry Lundgren, chief executive officer, said in a statement at the time, noting that spending by domestic customers remained tepid, especially in key apparel and accessory categories. “Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s stores in tourist centers, which are some of our company’s largest-volume and most profitable locations.”
One of the key concerns highlighted by Goldman’s Stephen Grambling, as reported by 24/7 Wall St, is that Macy’s growth initiatives aren’t enough to ease the pressure the retailer is experiencing from competition in e-commerce and m-commerce.
Other issues include the ever-pressing threat of the off-price and fast fashion segments, both of which continue to nab sales from traditional department stores.
Goldman Sachs isn’t the only firm that’s downgraded its rating of Macy’s. Merrill Lynch lowered its guidance from “buy” to “neutral.” Two analysts have issued a “sell” rating, 14 have said “hold” and 13 have assigned a “buy” rating to the stock.
Macy’s shares were trading $38.96 at noon on Friday. The retailer’s stock has lost almost half of its value in the past year.