Investment Thesis
Macy's demonstrates deteriorating financial health with negative free cash flow (-25M), razor-thin net margins (0.9%), and weak profitability metrics (ROE 3.1%, ROA 0.8%) that fail to justify its debt burden. The company's capital intensity exceeds operating cash generation, and interest coverage of 1.8x indicates limited debt service cushion in an economically sensitive retail sector.
M Strengths
- Modest revenue growth of 3.2% YoY suggests stabilization in a challenged sector
- Solid gross margin of 65.9% indicates reasonable pricing power on merchandise
- Quick debt reduction potential with manageable debt-to-equity ratio of 0.56x
M Risks
- Negative free cash flow (-25M) signals insufficient cash generation to fund operations and capital needs
- Extremely low net margin of 0.9% and operating margin of 1.9% provide minimal buffer for downturns
- Weak interest coverage ratio of 1.8x creates debt service vulnerability; high leverage relative to thin profitability
- Quick ratio of 0.18x indicates severe liquidity constraints for short-term obligations
- Return metrics (ROE 3.1%, ROA 0.8%) substantially below cost of capital, destroying shareholder value
Key Metrics to Watch
- Free cash flow trend and path to positive conversion
- Operating margin expansion and cost structure efficiency
- Debt refinancing risks and debt/EBITDA trajectory
- Same-store sales and comparable store growth
- Capital expenditure requirements and maintenance levels
M Financial Metrics
M Profitability Ratios
M Balance Sheet & Liquidity
M 5-Year Financial Trend
5-Year Trend Summary: Macy's, Inc.'s revenue has remained relatively flat over the 5-year period, with a 2% decline. The most recent EPS of $4.08 reflects profitable operations.
M Growth Metrics (YoY)
M Quarterly Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q3 2025 | $4.7B | $11.0M | $0.04 |
| Q2 2025 | $4.8B | $38.0M | $0.31 |
| Q1 2025 | $4.6B | $38.0M | $0.13 |
| Q3 2024 | $4.7B | -$19.0M | $-0.07 |
| Q2 2024 | $4.9B | -$22.0M | $-0.08 |
| Q1 2024 | $4.8B | $62.0M | $0.22 |
| Q3 2023 | $4.9B | -$22.0M | $0.15 |
| Q2 2023 | $5.1B | -$22.0M | $-0.08 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
M Capital Allocation
M SEC Filings
Access official SEC EDGAR filings for Macy's, Inc. (CIK: 0000794367)