This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Ahead Of The Bell: Citi Cuts High-end Retailers

NEW YORK (AP) â¿¿ Citing the view that wealthier shoppers are starting to get more cautious about their spending again, a Citi Investment Research analyst downgraded retailers Macy's Inc., Nordstrom Inc. and Saks Inc. on Wednesday.

During the depths of the recession, shoppers from all income levels curbed spending as they worried about high unemployment, a dismal housing market and a volatile stock market. As economic conditions began to improve, shoppers â¿¿ particularly those at the high-end â¿¿ started to spend a bit more.

But Citi's Deborah Weinswig says there are signs that those affluent shoppers are beginning to curtail their spending once more, as high-end department store operators reported a slowdown in revenue at stores open at least a year during the months of April and May. This figure is a key gauge of a retailer's health, because it measures growth at existing locations, while excluding results from stores recently opened or closed.

A continued slowdown in this critical revenue figure could weigh on Macy's, Nordstrom and Saks.

Weinswig said she is also growing increasingly concerned about the consumer heading into the second half of the year because the U.S. economic outlook is softening and consumer confidence is faltering.

She cut her ratings on Nordstrom, Macy's and Saks to "Neutral" from "Buy".

Weinswig said that Macy's sales were likely weak in June. The analyst trimmed her forecast for June revenue at stores open at least a year to an increase of 1-to-3 percent, compared with a prior forecast for gains of 3-to-5 percent.

The analyst also believes Macy's may slow down its stock repurchase program due to the economic uncertainty and slowing revenue growth. She now predicts the retailer may repurchase $750 million of its stock. Her previous prediction was for buybacks of $1 billion.

Weinswig slashed Macy's price target to $37 from $49. Shares of the Cincinnati-based chain fell 67 cents, or 2 percent, to $33.53 in premarket trading.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 17,698.18 -77.94 -0.44%
S&P 500 2,059.69 -8.20 -0.40%
NASDAQ 4,880.2280 -20.6570 -0.42%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs