This is a short post. I just wanted to mention Macy's, ticker symbol M, which has had some buyout discussion recently.

My one point that I had wanted to make was the low market cap of this stock. I was reading a Smart Money article and they mentioned that Macy's owns/controls $15b worth of their land leases. This provides a slight cushion btwn market cap and at least the value of these assets. With this value does M become more of a prospective buy? P/E is a little lower than others in the industry. Everyone knows the Macy's name which is nationwide (I was an employee) with over 800 stores and all of Bloomingdales.

I think this is an attractive buy but I dont see a real surge in price because this has been a pretty calm stock.

 

Macy's has not performed because the company hasn't executed well while others have. It's a broken company right now.

 

you think they need a management change? i mean, converting over 400 stores to a single brand name takes a lot of work and can be a long process.

 

I'm saying their merchandising is below par and until they change that the stock is going to lag. It has been rumored as a takeover candidate but that has not materialized. I'd like to see a positive change in their performance before I'd consider owning the stock. Something has to change. Whether that's management or not I don't know.

 

I think this is why the stock hasn't been performing. The integration of the May department stores didn't seem to go as smoothly as planned. I think they just need time to get things figured out. In the major shopping mall here it took almost a year to convert an old Robinsons-May to a Bloomingdales. Then in one of the other major malls that had both a Robinsons-May and a Macys they closed the Robinson's-May store and it was just an empty store for awhile. I'm not even 100% sure there's currently anything occupying that space as I rarely go to that particular mall.
I'm personally holding SKS at the moment as my retail play going into the fall. They reported good numbers last quarter but wall street didn't like the fact that there gross margin was significantly lower then comps such as JWN and Neiman Marcus. The analysts beat the topic to death in the conference call and the CEO addressed it saying that it's something they're going to focus on going forward. If they can get those gross margins up, look out above. I'm anxious to see how they do this quarter. They did ok last quarter while all the other retailers were blaming gas prices and the weather for missing estimates.

 

That's just one of the problems. What I'm saying is the Macy's is a broken company right now. I have no doubt they will fix it but it could take another year. Why sit with dead money when you could invest it in something which isn't broken. Come back to M when they start reporting good news. Buy some Nike or something while you wait.

 

NEW YORK, July 22 (Reuters) - Shareholders of Macy's Inc. (M.N: Quote, Profile, Research) could be winners even if the department store chain is not bought out, according to the latest edition of financial newspaper Barron's.

Shares of Macy's rose more than 12 percent on Wednesday after the online edition of Women's Wear Daily magazine reported that private equity firm Kohlberg Kravis Roberts & Co. [KKR.UL] was considering a bid for the department store chain.

Macy's shares ended the week at $41.92. Barron's said Macy's is ripe for a buyout and could fetch more than $52 a share in a takeover.

However, Barron's also said that even without a deal, Macy's shareholders could be in for a boost, because the company's current management has ample room to cut costs and improve marketing -- and may even find itself in a position to finance hefty stock buybacks.

 

Well it's your money. I'm just giving you my $0.02. I don't follow M so my opinion is pretty thin on details. If you've done your research and think it's a buy then go for it.

 

This is all speculation until management comes out and says "we're going to cut costs and improve marketing, we're also going to buyback shares". You'd be better off buying it then after the 2% run it has on the day that's announced. At least you'll know why you're buying it at that point.

If you're buying it strictly on the hopes of a buyout maybe you should price out the call options. They've probably come down in price a bit since the initial story.