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Why in heck is Macy's (M) (Cramer's Take) only a $6 billion company? Here's a department store chain that's getting growth back, that's aspirational as all get out, that has a management that understands that it needs to be regional in product but not in duplicative management, and it gets no respect whatsoever.
Yet we love the strip mall guys like Kohl's (KSS) (Cramer's Take) and Target (TGT) (Cramer's Take) because they are still throwing stores up all over the place and have perceived growth characteristics. We are willing to pay twice Nordstrom's (JWN) (Cramer's Take) growth rate for a company that's not that much better than Macy's, if at all. Twenty-three times Nordstrom's 12% growth vs. 15 times Macy's 10% growth makes no sense to me when I expect Macy's' growth to accelerate because of the My Macy's localizing initiative.
I understand the drawbacks here. Department stores are all things to all people and are difficult to run and execute. They sell a lot of what's not needed and have often been the places most caught with excess inventory. The original Macy's, not this one, went bankrupt once already as it got loaded down with debt. The growth of Macy's came from buying, or some would say, cobbling lots of regionals into a national and it didn't work so hot. A lot of the character was lost.
But My Macy's is undoing that and the cost of national advertising is just now beginning to benefit the chain as are the exclusive relationships with a few special vendors like Rachel Roy, Jones New York (JNY) (Cramer's Take) and Tommy Hilfiger. I believe these will pay off.
If it was valued as if it was going to blow the doors off the numbers, than I wouldn't want to step up here.
But I think there are four points between here and when it reports and they are worth trying to garner. Terry Lundgren, whom I spent a lot of time with Monday, has done a magnificent job of "fixing" Macy's and it is showing in the stores.
It will soon show in the numbers, especially now that cold weather is back and the employment numbers are showing signs of life -- the historically positive combination for owning the shares of this unique retailer.
Jim Cramer is co-founder and chairman of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer had no positions in the stocks mentioned.
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Reader Comments (Page 1 of 1)
12-08-2009 @ 10:24AM
Rick said...
You must not shop much. Nordstrom is sssoooooo much better than Macy's!
12-08-2009 @ 3:35PM
Jim McKay said...
It sounds like Mr. Cramer had a swell day with Macy's CEO, President and Chairman Terry Lundgren and Macy's celebrity designers at 34th St. But why didn't Mr. Cramer spend a day with Macy's customers across the USA? Are the customers really pleased with the changes at Macy's?
Here in Chicago, most shoppers will tell you that "My Macy's" has hardly fixed the failures of Mr. Lundgren's previous campaign to consolidate local stores under the Macy's brand. In fact, several months ago, a survey of 522 Chicago shoppers showed that even three years after the switch to Macy's, a whopping 78% still prefer Marshall Field's over Macy's and would like Marshall Field's restored in brand, service and style to the Chicagoland market. Yes, 78%! (MOE - 4.23%, CI = 95%, see http://www.fieldsfanschicago.org/#survey ) Marshall Field's and its connected brands were appraised at over $420 million in 2004. Given the overwhelming customer interest that still exists in the brand and institution "Marshall Field's" when attached to the State Street flagship in Chicago, should Mr. Lundgren be letting such a valuable asset go unused? One might consider this in light of today's Macy's market cap at $6.93 billion. How is everything "fixed" as Cramer claims?
In Chicago, many consider Terry Lundgren something akin to "The 'Lundgrinch' who stole Marshall Field's and Christmas." Just like Suess's Grinch, the whole beautiful tree that was Marshall Field's really didn't have to be stuffed up the chimney and taken away to fix one light in back. And when Mr. Cramer says everything is "fixed" at Macy's, he comes off as akin to the naive tot "Cindy Lou Who" who buys into the Grinch's story. Investors deserve more complete information than Mr. Cramer's puffy, fairy-tale visit with Mr. Lundgren. How about some hard numbers from Mr. Lundgren, numbers where he doesn't roll former Dayton's and Hudson's stores' numbers into the Marshall Field's numbers.
Macy's campaign this holiday season is entitled "Believe." Here in Chicago, most everyone believes Macy's has been no match for Marshall Field's and that it should be restored. Forget "My Macy's"-- I want "My Marshall Field's."
12-09-2009 @ 4:09PM
michaelseanmurray said...
Is this article for real? The Macys in Chicago are a joke, they are a wanna be target. The people I know are still not forgiving the offing of Marshall Fields,and if you ask me Mr. Cramer sounds a little too chummy with Mr. Lundgren. The article has a little too much spin in it.
12-09-2009 @ 6:08PM
Chi shopper said...
It sounds like Mr. Cramer believes everything Lundgren told him. Perhaps he should try going in some of the Macy's stores, especially on State Street in Chicago, or asking some of the people walking past Macy's why they aren't going in.
12-15-2009 @ 1:24AM
Alex from Chicago said...
I hate how they think that Macy's appeals to younger people more! I am 27 years old. When Marshall Field's was converted to Macy's I was only 23. I have only walked into the store once with a friend, and was disappointed in how the merchandise and showrooms looked more like a WalMart store. What a disgrace!!
Give us OUR Marshall Field's back, and take back your Macy's!