Macy’s Inc.’s shares rebounded Monday, almost erasing the 4.9 percent decline on Friday, after J.P. Morgan upgraded the stock to “neutral” from “underweight” and investors digested chief executive officer Terry Lundgren’s defense of the retailer.
Although retail stocks fared better Monday than they did during Friday’s torturous session, the rally in Macy’s shares was exceptional. The Standard & Poor’s Retail Index declined 0.6 percent to end the day at 325.99.
Macy’s shares closed at $16.28 in trading on the New York Stock Exchange, up 70 cents or 4.5 percent. The stock had declined 81 cents to $15.58 on Friday. Other strong gainers included Abercrombie & Fitch Co. (3.6 percent), The TJX Cos. Inc. (3 percent), American Eagle Outfitters Inc. (2.3 percent) and Aéropostale Inc. (1.7 percent).
Among those with large declines were Chico’s FAS Inc. (7.8 percent), Dillard’s Inc. (4.9 percent), J.C. Penney Co. Inc. (4.2 percent), The Talbots Inc. (2.2 percent) and Kohl’s Corp. (2.1 percent).
The J.P. Morgan upgrade was based principally on how steeply Friday’s trading had damaged the stock. “While we still think the company’s divisional integration holds a high degree of risk and that [second-half 2008 and 2009] Street estimates are too high, the stock at $15.58 appears to be more accurately discounting these issues today than about two-and-a-half months ago,” broadlines analyst Charles Grom said in a research note.
The quarter-to-date same-store sales decline of 1.9 percent, revealed in Lundgren’s letter to his management team and consequently to investors, was characterized as “no worse than feared.” Lundgren said Macy’s is doing better than the declines of 2.1 percent, 3.3 percent and 5.9 percent registered by Kohl’s, J.C. Penney and Nordstrom, respectively.
J.P. Morgan also backed Lundgren’s argument that fears about Macy’s liquidity are “unwarranted,” noting that, like Goldman Sachs Group, it had received “numerous questions from investors over the past two weeks.…Given that sales [quarter-to-date] are close to plan, it’s unlikely that Macy’s credit position has eroded further since the end of 1Q, which should alleviate these market concerns.”
Citigroup analyst Deborah Weinswig issued a research note late Monday titled “Liquidity Not an Issue.”
The J.P. Morgan research note was hardly a rubber stamp of Lundgren’s view. The brokerage house said Macy’s will struggle with year-ago comparisons in its home business, where Martha Stewart’s line was launched in 2007, and at Bloomingdale’s. The firm also expects the high-end/luxury business to become more promotional, pressuring gross margins, and for the retailer’s localization initiative to present “the risk that local consumer taste and placed orders may not perfectly align.”
J.P. Morgan said it considers Macy’s earnings-per-share guidance for the full year of $1.85 to $2.15 to be “too optimistic,” and advised the company to “take a page out of Kohl’s playbook and adapt a more conservative outlook. In particular, the company sees [same-store sales] down 1 percent to positive 1.5 percent, which looks too ambitious at this juncture.”
Even as it upgraded the stock, J.P. Morgan lowered its EPS estimates for the company to $1.77 this year and $1.75 in 2009, down from $1.83 and $1.85, respectively.
The note also chided Macy’s for its decision to stop providing quarterly guidance or monthly comps, saying it “has clearly backfired, in our opinion. To this end, the stock appears to be more volatile year-to-date than at any point in 2007.
In his new book “Hollywood Royale,” Andy Warhol’s Protégé Matthew Rolston celebrates the Eighties revival of Hollywood glamour. Featuring more than 100 portraits taken by Rolston from 1977 to 1993, the book contains photos of icons like Michael Jackson, Cyndi Lauper, and @drewbarrymore, pictured here in 1991. “Hollywood Royale,” out today, will be accompanied by an exhibition opening at Los Angeles’ Fahey/Klein Gallery on March 1. #wwdeye
"Nowadays when life is not so happy with everything going on in the world, I think people come to me for a little bit of whimsy and color and fun." - Designer Rebecca De Ravenel on her cult-favorite jewelry line. (📸 : @vsteves) #wwd40
“Everyone is talking about how the retail industry is struggling, but I think it’s an incredible time because brands who are doing something different and innovative are setting themselves up for the future,” said @adamgoldston, who founded the luxury athletic brand @apl with his brother @ryangoldsten. The Goldston’s are part of WWD’s 40 under 40: a group of industry notables. See the rest of the list on WWD.com. (📷: @vsteves) #wwd40
@eyeswoon blogger Athena Calderone debuted her first-ever cookbook, “Cook Beautiful,” which is heavily centered on the presentation and visual expression of food. Pictured here are her miso glazed carrots from the book. Get the recipe on WWD.com. (📷: @johnny_miller_) #wwdeye
“It’s passion that helps get anybody to a certain point and it’s what’s propelled me,” said Kith founder @ronniefieg, one of WWD’s 40 under 40: a group of industry notables who are changing the face of retail, fashion and beauty. Fieg, who opened a Manhattan flagship on October 7, began his career at age 13 as a stock boy and salesman for footwear chain David Z. “I think staying true to [my] beliefs, hard work and passion have gotten me to where [Kith] is today.” See the rest of the 40 at WWD.com. (📷: @vsteves) #wwd40
25-year-old @samweaving is about to break out this fall, starring in Netflix’s horror film “The Babysitter,” fittingly out today on Friday the 13th. That’s not the only place you’ll be seeing her, though — Weaving’s got a role Showtime’s “SMILF” and another alongside Frances McDormand and Woody Harrelson in “Three Billboards Outside Ebbing, Missouri.” Though she’s got a full plate at the moment, there’s one role she’s got her eye on: Marilyn Monroe. “I’m a little too young at the moment, but it’s on my bucket list,” the actress told WWD (📷: @dandoperalski) #wwdeye
BFF's Poppy Jamie and Suki Waterhouse celebrated the launch of their bag line Pop x Suki at Nordstrom last night. "The line is really about our friendship, and how we are so different but complement each other," said Waterhouse. 👯 (📷: Katie Jones) #wwdeye
After designing the new @louisvuitton and @bulgariofficial flagships and a @chanelofficial boutique opening in Japan, @petermarinoarchitect has another project on his plate: The Lobster Club. Located in the Seagram Building, it’s the famed architect’s first restaurant project in New York, serving up modern Japanese brasserie-style cuisine. Bronze hues, bespoke material detailing, blush and chartreuse tones and a heavy emphasis on Picasso can be seen throughout. Mark your calendars for Nov. 1 for the much-anticipated opening. (📷: @clint_spaulding) #wwdeye
Did you know: @carlychaikin of "Mr. Robot" has been painting for about a decade? The actress, who plays Darlene on the show, is a self-taught artist who lists Salvador Dalí and Chuck Close as some of her idols. Chaikin told WWD that painting is a form of meditation for her — A much-needed one given the intensity of "Mr. Robot." See a piece Chaikin is working on at WWD.com (📷: @jilliansollazzo) #wwdeye