Macy’s Most At-Risk Retailer From Credit Change: Morgan Stanley

Dec. 19, 2019, 11:56 AM

Current Expected Credit Loss (CECL), a new accounting rule for loan loss reserves that goes into effect on Jan. 1, is “not on retail investors’ radar,” according to Morgan Stanley analysts, who believe the impact to department stores, especially Macy’s, is “more material than market realizes.”

  • Department stores have become “overly reliant on credit income given weak fundamentals and eroding non-credit operating income,” they wrote in a note
    • CECL will require lenders to estimate and book loan loss reserves for losses they expect over the life of a loan, not just the current 12 month forward credit card standard ...

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