The Zacks Analyst Blog Highlights: Macy's, Rite Aid, Big Lots, Ross Stores And TravelCenters Of America
Zacks Investment Research | Feb 05, 2020 08:51PM ET
For Immediate Release
Chicago, IL – February 6, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Macy’s, Inc. (NYSE:M) , Rite Aid Corp. (NYSE:RAD) , Big Lots, Inc. (NYSE:BIG) , Ross Stores, Inc. (NASDAQ:ROST) and TravelCenters of America Inc. (NASDAQ:TA) .
Here are highlights from Wednesday’s Analyst Blog:
Macy’s Closing Stores: Is Brick & Mortar Retail Dying?
Big American retailer Macy’s, Inc. recently announced plans to close a fifth of its department stores over the next three years. What’s more, the retail organization will slash another 2,000 corporate jobs. Macy’s also plans to abandon its dual headquarters in Cincinnati but has assured to keep nearly 400 of its namesake locations running. Nonetheless, the closing of the stores is mostly due to the drastic rise in online shopping.
Other department-store chains like J.C. Penny and Sears have also lost customers in recent times to e-commerce giants Amazon (NASDAQ:AMZN) and eBay (NASDAQ:EBAY). Only the smart ones like Walmart (NYSE:WMT) survived by investing profusely in technology to deliver an enriching shopping experience for customers. However, e-commerce players can’t be solely blamed for the dismal performance by department chains. Unreasonable expansion of shopping malls, rising rent, collapse of leveraged buyouts and cash-strapped consumers have played a role in squeezing brick-and-mortar retailers’ revenues and profit margins.
Fed’s policies, by the way, have impacted brick-and-mortar retailers as well. Since 2008, the Fed helped retailers borrow a lot of money at almost zero interest rates and that resulted in an enormous retail bubble. No doubt, many private retail chains have gone bankrupt since 2012. And with weaker wage growth in the last couple of years, there are far more problems retailers have to face than just structural issues.
But those eager to invest heavily in brick-and-mortar retailers, shouldn’t lose hope. Take Macy’s for instance! The 161-year old retail chain is expected to open smaller stores in open-air shopping centers, which are seeing more footfall nowadays. Macy’s also expects to save almost $1.5 billion annually by 2022, much of which will be reinvested in upgrading technologies.
And talking about the bigger picture, American consumers continue to be confident about their well-being. Per the Conference Board, the consumer confidence index jumped to 131.6 in January from 128.2 in December. Consumer confidence touched the highest level in five months, indicating the economy’s regaining momentum. Americans’ assessment about the economy for the next six months is also promising. The expectations index edged up to 102.5 from 100.
Lynn Franco, director of economics at the Conference Board, added “optimism about the labor market should continue to support confidence in the short-term and, as a result, consumers will continue driving growth and prevent the economy from slowing in early 2020.”
Such a record consumer confidence number is a significant reading since it has been, historically, good at predicting future consumer spending for the next three to six months. More the confidence household generates, more will they spend and in the process benefit brick-and-mortars.
4 Brick-And-Mortar Retailers to Snap Up
We have, thus, selected four brick-and-mortar retailers that will make the most of the strength in consumer confidence. These stocks also boast a Zacks Rank #1 (Strong Buy) and 2 (Buy).
Rite Aid Corp.operates a chain of retail drugstores in the United States. The company operates through two segments, Retail Pharmacy and Pharmacy Services. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved more than 100% up over the past 60 days. The company, which is part of the Zacks Investment Research
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