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GuruFocus has detected 3 Warning Signs with Macy's Inc \$M.
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Macy's Inc (NYSE:M)
Gross Profit
\$10,157 Mil (TTM As of Jan. 2017)

Macy's Inc's gross profit for the three months ended in Jan. 2017 was \$3,264 Mil. Macy's Inc's gross profit for the trailing twelve months (TTM) ended in Jan. 2017 was \$10,157 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Macy's Inc's gross profit for the three months ended in Jan. 2017 was \$3,264 Mil. Macy's Inc's revenue for the three months ended in Jan. 2017 was \$8,515 Mil. Therefore, Macy's Inc's Gross Margin for the quarter that ended in Jan. 2017 was 38.33%.

Macy's Inc had a gross margin of 38.33% for the quarter that ended in Jan. 2017 => Competition eroding margins

During the past 13 years, the highest Gross Margin of Macy's Inc was 40.71%. The lowest was 39.08%. And the median was 40.20%.

Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Macy's Inc's Gross Profit for the fiscal year that ended in Jan. 2017 is calculated as

 Gross Profit (A: Jan. 2017 ) = Revenue - Cost of Goods Sold = 25778 - 15621 = 10,157

Macy's Inc's Gross Profit for the quarter that ended in Jan. 2017 is calculated as

 Gross Profit (Q: Jan. 2017 ) = Revenue - Cost of Goods Sold = 8515 - 5251 = 3,264

Macy's Inc Gross Profit for the trailing twelve months (TTM) ended in Jan. 2017 was 2255 (Apr. 2016 ) + 2398 (Jul. 2016 ) + 2240 (Oct. 2016 ) + 3264 (Jan. 2017 ) = \$10,157 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Macy's Inc's Gross Margin for the quarter that ended in Jan. 2017 is calculated as

 Gross Margin (Q: Jan. 2017 ) = Gross Profit (Q: Jan. 2017 ) / Revenue (Q: Jan. 2017 ) = (Revenue - Cost of Goods Sold) / Revenue = 3,264 / 8515 = 38.33 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.

Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Macy's Inc had a gross margin of 38.33% for the quarter that ended in Jan. 2017 => Competition eroding margins

Related Terms

Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Macy's Inc Annual Data

 Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17 Gross_Profit 10,636 9,883 9,516 10,179 10,667 11,148 11,206 11,242 10,583 10,157

Macy's Inc Quarterly Data

 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Gross_Profit 2,429 3,775 2,432 2,494 2,337 3,320 2,255 2,398 2,240 3,264
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