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Macy’s has been removed from the benchmark S&P 500 stock index. Its market capitalization currently is a representative of small-cap space according to S&P Dow Jones Indices.
American department store Macy’s Inc (NYSE: M) is currently experiencing the adverse effect of the novel coronavirus as it has been revealed that it will be removed from the benchmark S&P 500 stock index and be replaced by air conditioning company Carrier Global. Carrier Global Corp spun out last month by United Technologies in a bid to shed assets to complete its merger with Raytheon Co.
The firm owing to the virus has been forced to close all its retail stores and still struggles to move its activities online. The firm’s share plunged over 70% this year already as its market value dropped to $1.52 billion on Tuesday and trade currently at $4.74 after another 7.6% drop.
Macy’s shares were marked 5.4% lower in early trading Wednesday to change hands at $4.64 each, after hitting an all-time low of $4.52, in a move that would extend the stock’s one-month decline to around 65%.
Macy’s market capitalization currently is a representative of small-cap space. Now the firm would be part of the S&P small-cap 600 indexes, effective April 6. The firm’s stock also dropped around 80% in the past 12 months compared with losses of around 10% for the S&P 500.
Outside Macy’s stores, the COVID-19 pandemic has forced other traditional stores like Gap Inc to close their stores, lay off employees, withdraw forecast and stop dividends for shareholders. All Macy’s stores in the U.S. are currently closed as the firm still has not set a date when it will re-open. The firm said on Monday that staff sack would begin this week.
“Across Macy’s, Bloomingdale’s, and Bluemercury brands, we will be moving to the absolute minimum workforce needed to maintain basic operations,” the company said in a statement.
Macy’s Financial Flexibility Plan after Stock Plunge
The firm announced suspending dividends on Monday and drew a line of credit, frozen hiring, and spending, and canceled some orders. The company also withdrew its financial outlook for 2020.
On the other hand, about six weeks back, Macy’s had seemingly reached a critical point in its ongoing turnaround after it reported a stronger-than-expected fourth-quarter profit thanks in part to a “meaningful sales uptick” in the pre-Christmas period.
The firm projected that in 2020, net sales would be between $23.6 billion to $23.9 billion while adjusted earning where set between $2.45 and $2.5 per share.
They ensured the firm take steps to maintain financial flexibility through suspending dividends, freezing both hiring and spending, stopping capital spend, reducing receipts, canceling some orders and extending payment terms, and evaluating all other financing options.