Financial Statement Analysis: Macy’s Inc. vs. Nordstrom, Inc.
a. Macy’s, Inc. is a retail organization operating retail stores and Internet websites under two brands (Macy’s and Bloomingdale’s) that sell a wide range of merchandise, including men’s, women’s and children’s apparel and accessories, cosmetics, home furnishings and other consumer goods. Macy's’ competitors include other middle priced-ranged department stores including Nordstrom, Bed Bath & Beyond, Belk, Bon Ton, Burlington Coat Factory, Dillard’s, Gap, J.C. Penney, Kohl’s, Limited, Lord & Taylor, Neiman Marcus, Nordstrom, Saks, Sears, Target, TJ Maxx and Wal-Mart. p. 4, 10-K b. Macy’s fiscal year ends on the Saturday that is closest to January 31st of each year. For 2010 it ended on January 29th, 2011. For 2009 it ended on January 30th, 2010. For 2008 it ended on January 31st, 2009. c. Depreciation of owned properties is provided primarily on a straight-line basis over the estimated asset lives, which range from fifteen to fifty years for buildings and building equipment and three to fifteen years for fixtures and equipment. F-10, 10-K d. Merchandise inventories are valued at the lower of cost or market using the last-in, first-out (LIFO) retail inventory method. p. 23 and F-17, 10-K e. The largest source of cash from financing activities was through the issuance of common stock providing $43 million. F-7, 10-K f. The largest amount of cash used for investing activities was $339 million dollars on purchasing property and equipment in 2010. p.20, F-7, 10-K g. The stock price at the end of the 2010 fiscal year was $22.99(Jan 28, 2011) compared to $15.93 at the beginning of the fiscal year (Jan 29, 2010). Company stock was at a low point at the beginning of the 2010 fiscal year. It reached its peak value of $23-$24 around April-May 2010. The stock reached a low point of $17 around mid-July. By early November it reached $25-26. It was quite stable from November to the beginning of Jan 2011. By the end of the 2010 fiscal year it had slightly dropped to $22.99.
Figure 1. Macy’s Stock for Fiscal Year 2010
When the stock price went from $16 at the beginning of the 2010 fiscal year to $24 dollars in May was largely because the company turned from net loss of $88 million (May 2009) to net income of $23 million (May, 2010). Additionally, during January 2010, Macy’s announced plans to launch a new Bloomingdale's Outlet store concept in 2010, which would initially consist of four Bloomingdale's Outlet stores and in February 2010, Bloomingdale's opened in Dubai, United Arab Emirates. The decline from May to July was largely caused by the current economic recession. In its second quarterly report, it mentioned that consumer spending levels have been adversely affected by a number of factors, including substantial declines in the level of general economic activity, decline in real estate and investment values, substantial increases in consumer pessimism, unemployment, the rising costs of basic necessities, and a significant tightening of consumer credit. The bouncing from July to November is mainly due to optimism of economic recovery and holiday shopping. Macy’s Third Quarter earnings beat estimates as sales advanced. Net income totaled $10 million, in the three months ended Oct. 30, compared with a net loss of $35 million a year ago. The stock price for Macy’s, Inc (M) was $27.70 on 10/10/11. NORDSTROM, INC.
a. Nordstrom’s Inc. is a retail organization operating retail stores and online stores that focus on high-quality brand name and private label merchandise focused on apparel, shoes, cosmetics and accessories. They also have a credit segment in the form of a federal savings bank, private label credit cards, Visa credit cards, and debit cards. Nordstrom’s competes with other national, regional and local retail establishments that may carry similar lines of merchandise, including department stores, specialty stores,...
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