Earnings Outlook: Macy’s earnings: Shares are rising but same-store sales are not

Morgan Stanley downgraded Macy’s Corp. last week on concerns about same-store sales in a note that came just ahead of first-quarter results, that are scheduled for Wednesday.

Macy’s M, -0.03% stock is up nearly 27% for the past year, but Morgan Stanley analysts led by Kimberly Greenberger are expecting that to change after the first quarter as return on invested capital (ROIC) deteriorates.

“Macy’s increased reliance on private-label credit card income and real estate gains masks the underlying deterioration in core retail EBIT (-63% since 2014),” analysts wrote. EBIT, or earnings before interest and taxes, has fallen 29%, or lost $831 million, since 2014.

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