New York City has more tourist attractions than one can count, including numerous museums, Wall Street, Central Park, Grand Central Terminal, Times Square, the Empire State Building and the National September 11 Memorial and Museum, among others.
In our age, when shopping has gone from being a necessity to a source of entertainment, it should be no surprise to find a store considered as among the most popular New York tourist destinations for visitors and locals alike. I'm referring to, of course, the Macy's (M) flag ship store on Herald Square in midtown Manhattan.
Around for more than 100 years, the store has always drawn crowds. Now, it seems likely to become an even larger attraction. The New York Times recently reported on a four-year, $400 million makeover of Macy's on Herald Square. That's an enormous amount of money, though the store is enormous, with 2.2 million square feet. Wikipedia lists only 12 malls in the country the same size or larger than this single store. According to the Times, the store attracts 20 million visitors and generates about $1 billion in annual revenues.
Macy's has more than just the largest department store in the country. It runs a successful chain of traditional department stores at a time when specialty stores and online shopping are battering many conventional retailers. In terms of strategy, Macy's has several strong advantages. It has created a chain of hundreds of stores across the country, all with the Macy's name (the company also owns Bloomingdale's), it has gone local, meaning it carries merchandise local to individual stores, so not all of its stores carry the same merchandise, it uses its huge size to drive efficiencies and gain better pricing and it has its own brand names that have had success among shoppers.
In addition, a strategy I created from the writings of James P. O'Shaughnessy also views Macy's as a desired destination, namely for investors. The strategy likes the company's large market cap (nearly $20 billion), earnings per share that have risen in each of the past five years and a low price-to-sales ratio of 0.71 vs. the strategy's maximum of 1.5 (this variable identifies growth stocks still cheap enough to buy). Among the stocks that meet all of the above criteria, the strategy picks the top 50 based on their relative strength, which measures how well a stock has performed in the past year vs. the market. With a relative strength of 76, Macy's is in this top-50 group of very desirable stocks.
