UBS Slashes Macy's (M) Estimates

UBS analyst, Michael Binetti slashed his estimates and price target on Macy's (NYSE: M) after publishing a conservative earnings preview earlier in the week.

He reduced 4Q EPS est to $2.60 from $3.05—which includes $250m of asset sale gains—based on:

1) -3.5% SSS (ex-licenses)

2) GM: -100bp YOY

3) 150bp of unfavorable SG&A deleverage (ex-gains).

He also slashed 2016 ests to $4.20 in EPS from $4.84. The assumptions embedded in the model include -1% SSS (prev. +1%), -1.3% total rev decline (net of 35-40 store closures, 50 new Backstage stores), -25bp of GM compression, and ~15bp of SG&A leverage.

Lowering PT to $43 from $53.

Amid the news the analyst is reiterate near term concerns for Gap, Inc. (NYSE: GPS) and Kohl's Corp. (NYSE: KSS). Also, while PVH Corp. (NYSE: PVH) earnings are at risk of slower tourism & M trends, that stock currently trades at 11.7x '16 est of $7.40 - making the stock cheap even if EPS ests need to move lower in the NT. The firm also likes Ralph Lauren (NYSE: RL) as recent meeting w/RL suggested that guidance for margins to compress significantly in the Dec-qtr is specifically due to heavy promo support for d-store.

For an analyst ratings summary and ratings history on Macy's click here. For more ratings news on Macy's click here.

Shares of Macy's closed at $40.44 yesterday.

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