Macy's Inc. shares increased Thursday in a down market with the company's plans to cut down costs by $400 million and close 36 stores in early 2016. By midday, shares were up by 3.1 percent as the S&P 500 was down by 1.3 percent.
It was a sad moment for the store during the final three quarters of 2015 as 36 stores closed down which accounted for $375 million in yearly sales but experts said that Macy's real estate plans is the real reason for a newfound positive spirit, a Market Watch article revealed.
Macy's has hired Eastdil Secured, a real-estate investment bank which works with Credit Suisse and Goldman Sachs to take care of their mall-based properties and their properties in key cities such as San Francisco, Manhattan, Chicago and Minneapolis. The company believes that a professional and experienced real-estate executive will be able to successfully lead their real estate activities.
"We highlight our view that Macy's real estate offers tremendous valuation, regardless of when and/or how it is monetized," Nomura analysts said on a publication on Wednesday. The financial establishment maintained its buy rating, but reduced its price target to $50 from $53.
On the other hand, analysts from Stifel said that Macy's Inc. shares at undervalued and restated their buy rating according to a publication Wednesday.
"While we anticipate near-term weakness at Macy's, longer term we believe the company's strategic initiatives will play out favorably, including the sale of some of its real estate," Stifel experts said.
The company's plan to cut down on expenses by about $400 million at the start of 2016 also sent positive messages. Macy's heads are planning to reorganize existing outlets, improve management and cut staff members as well as other cost-cutting measures according to a note released Thursday.
"The company plans to reorganize the existing Macy's stores for better management and merchandise purposes, cut thousands of staff members and other measures. Analysts at Cowen & Co. predicted that these cuts would "likely be well-received by investors."
