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Posted on May 5th, 2014, by

the capital is the highest in Debehams that is probably the result of the less significant impact of the deterioration of the economic environment on the company. In fact, Debehams operates internationally. This is why the company can compensate its financial losses in some markets by stable or growing profits in other markets. In this regard, Macy’s and Sacks are in a more difficult financial position because they operate in the US and they have to focus entirely on the domestic market. In such a situation, they are fully dependent on the economic environment in the US and they cannot develop flexible financial policies using the potential of international markets as Debehams does.

On the other hand, it is worth mentioning the fact that Sacks and Debehams did not declare any dividends in 2010 and 2011 and does not plan to in the nearest future. In fact, this means that both companies are not capable or willing to pay off dividends to their shareholders. Obviously, such policy conducted by Sacks and Debehams is not very attractive for investors. This means that investors are unlikely to invest in Debehams and Sacks, if they look for high dividends.

In this regard, Macy’s is more attractive for investors because the company pays off dividends to its shareholders on the regular basis. In fact, Macy’s dividend yield is 0,8 that is apparently not the highest in the industry but still the company is capable to pay off dividends to shareholders. Therefore, if investors are looking for stable and reliable company that pays off dividends on the regular basis, they will be definitely attracted by Macy’s. At any rate, in terms of dividends’ policy, Macy’s is in an advantageous position compared to Debehams and Sacks.

Nevertheless, on comparing the financial performance of Macy’s and Debehams (See App. Table 1-2), it is possible to point out that the enterprise value of Debehams is almost five as much as that of Macy’s but Macy’s market capitalization is much higher compared to that of Debehams. Therefore, it is possible to presuppose that Macy’s keeps growing, while Debehams has slowed down its business development. The financial performance of both companies is table and they can maintain the stable marketing performance in the future.

However, they should take into consideration the impact of the competitive environment and the pressure from the part of their major rivals. In this regard, it is worth mentioning the fact that Macy’s may face the competition from the part of Debehams, if the latter attempts to enhance its position in the US market and starts aggressive expansion marketing strategy. In actuality, such threat is rather hypothetical because of the current economic environment in the US and policies conducted by Debehams, but this strategy cannot be ignored by Macy’s and the company should take into consideration the threat of the tightening competition in the US market. In addition, the company may face the growing pressure from the part of such companies as Sacks because they also attempt to enhance their position in the US market.

Thus, taking into account all above mentioned, it is important to place emphasis on the fact that the development of the retail industry is accompanied by the growing competition. In this regard, Macy’s may face the tight competition from the part of companies operating in the US, such as Sacks, and multinational corporations which may attempt to enhance their position in the US, such as Debehams. However, in actuality, the financial position of Macy’s is strong, even compared to Debehams which operates internationally. Both companies faced the deterioration of their performance in 2008-2009 because of the deterioration of the economic environment. However, this trend could be traced in the retail industry at large. At any rate, Sacks, another company operating in the retail industry in the US also faced considerable problems with its business development within the given timeline. Naturally, the deterioration of the economic environment affected the financial performance of companies. Nevertheless, at the moment, Macy’s and Debehams, as well as Sacks, demonstrate a stable financial performance and they still have the potential to grow. However, they may need investments. In this regard, Macy’s is in an advantageous position because its dividend policies are more investor-friendly compared to Debehams and Sacks. At any rate, Macy’s is more attractive for investors, who are looking for dividends.

 

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