While Macy’s has the Annual Flower Show that decorates the flagship store and the Macy’s Thanksgiving Day parade it is no longer the center of American retail culture or social life. At a 12.85 P/E and a 1.90% yield actual name brands with high end appeal these stores carry are better values like Coach, Inc. (NYSE:COH) with a 2.40% yield.
Macy’s has opened a Marilyn Monroe shop within shop for its Mstylelabs. This is more like the Selfridges of old but is only available online or at one of 150 of Macy’s 800 stores.
As for Nordstrom its outlet stores are helping their top and bottom lines the most while the full price stores compete against Saks Inc (NYSE:SKS) Fifth Avenue and privately held Neiman Marcus. Nordstrom as a stock is a comparable value to Macy’s with a slightly higher yield at 2.10% and a 15.29 P/E. Nordstrom has an operating margin of 10.86% compared to Macy’s 9.63%. In its defense, Nordstrom has the best reputation for customer service of just about any retailer.
Both Macy’s and Nordstrom’s have been tweaking their localization concepts and customers can order out of stock items at their local store from other stores in the chains to be delivered to their door or the store.
On the tech innovation front Macy’s worked with eBay Inc (NASDAQ:EBAY)‘s PayPal on some cross promotional activity during the holiday season and Nordstrom has been doling out tablets to associates to expedite checkout and inventory. Both companies have strongly beefed up their web and social media presence and are on a par with most other bricks and mortar retailers’.
Past performance doesn’t guarantee future results
While Macy’s has enjoyed 27.17% annual EPS growth over the last five years analysts see half that going forward. Nordstrom’s forward 5 year EPS growth is expected at 11.39% lower than the last 5 year rate of 15.89%.
Compare these to Amazon.com, Inc. (NASDAQ:AMZN) which has a 39.29% five year EPS growth rate as it grows its Prime membership numbers, its hardware offerings (Kindle and Kindle Fire), the all-encompassing e-commerce site which enjoyed its best holiday season ever (which they say every year, it seems), and its cloud and content offerings.
Apparently, shopping is more thrilling with a bargain on Amazon.com, Inc. (NASDAQ:AMZN) and a package to open the next day and content is delivered to your mobile device in seconds.
Over the last year Nordstrom is down and Macy’s is up 5.31% while Amazon.com, Inc. (NASDAQ:AMZN) is up 31.59%. Amazon has an operating margin of 1.11% but has less debt as a ratio than these department stores.
Looking into the cut crystal ball
Department stores have gradually declined since the founding of Selfridges which maintains its allure as a destination. These American stores meanwhile have lost their way and it’s not just Macy’s or Nordstrom. Longer term they don’t justify your money as an investment in their future. As Amazon grows into reasonable forward P/Es with higher growth, that’s the place where shopping is still thrilling.
The article Is Shopping Thrilling Anymore, Anywhere? originally appeared on Fool.com and is written by AnnaLisa Kraft.
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