Wal-Mart Stores, Inc. (WMT), Nordstrom, Inc. (JWN), Macy’s, Inc. (M): Three Retail Stocks To Watch This Year

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Since 1858
Shares of Macy’s, Inc. (NYSE:M) sunk after the company reported a dismal second quarter. The company’s reported results fell short of analyst consensus estimates on both the top and bottom lines. It earned $281 million, or $0.72 per share, short of the $0.78 per share analysts had estimated. Revenue tumbled to approximately $6.1 billion, short of the nearly $6.3 billion analysts expected. To compare these results on a year-over-year basis, the company earned $279 million, or $0.67 per share in last year’s second quarter.

Unfortunately the company needed to lower its growth and earnings guidance for the remainder of the year. Macy’s, Inc. (NYSE:M) announced it now expects sales at stores open at least a year to climb between 2% and 2.9%, down from previous guidance of a 3.5% increase. Earnings are now projected at $3.80 to $3.90 per share, down from the previous outlook of $3.90 to $3.95 per share.

On the conference call, management blamed a difficult economic environment within its customer base. The market in which Macy’s, Inc. (NYSE:M) caters to has yet to recover in many cases. High unemployment and stalled wages have hurt the back-to-school season. Rising fuel costs have kept some of these patrons from making the drive to the mall in recent weeks. I would be weary of the company’s long-term growth potential until we see strong gains within the low- to middle-income population.

Wrap up
Retail earnings were tough to swallow as high unemployment, inflation, and tough comparisons weighed on the sector. Everything from the low end to the high end felt pressure during the second quarter. Keep your eye on fuel prices and unemployment gains for the remainder of the year as management stated these variables would greatly affect near-term growth.

The article 3 Retail Stocks To Watch This Year originally appeared on Fool.com and is written by Nathaniel Matherson.

Nathaniel Matherson has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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