Macy's (M) will continue to lose market share due to significant challenges versus peers in price, product and service, with its Q2 results reinforcing this view, UBS Securities said.
The investment firm said in a Wednesday note that it expects earnings to remain pressured over the next few years and projects a 2% 5-year EPS compound annual growth rate. It expects consensus EPS to move lower in the near term as softer sales and operating expense deleverage weigh on earnings.
Macy's guided Q3 comparable sales to roughly flat at the midpoint despite strong Q2 results, suggesting sequential deceleration and continued market share pressure, according to the note.
Looking ahead, difficult comparisons from Reimagine stores and the diminishing benefit from the luxury market disruption could make current growth levels harder to sustain, the brokerage said.
The brokerage raised its 2026 earnings per share estimate to $2.30 from $2.10 and its 2027 and 2028 EPS estimates by 3% to $2.15 and $2.20, respectively.
UBS has a sell rating on Macy's with a price target of $10.
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