Macy's Had A Great Holiday Season, Shares Rise

On Wednesday (Jan 8), department store operator, Macy's Inc. ( NYSE: M) reported a marginal fall in holiday period same-store sales. This was surprising to investors as they were bracing for a sharper drop following an earlier profit warning. The company which is based in New York had its shares rise by about 4% to $18.32, which is a near five-month high.

Macy's Inc. which earlier cut its annual profit forecast in November, blaming weak international tourism and sluggish mall traffic, is among the first major corporate names to report sales for the holiday season. The holiday season is a parameter that is often used to study the health of United States consumer spending.

According to an IBES data obtained from Refinitiv, Macy's Inc. reported a 0.6% drop in comparable sales at its owned and licensed stores for the months of November and December, 2019, which is about two-thirds of the fourth quarter. Analysts expected that there was going to be a 1.8% fall in the last quarter of 2019.

Founder of Retail Metrics, Ken Perkins in an interview with Reuters said, "It's bit of a relief for investors, as they were concerned sales were going to be down more than that. Given the traffic at stores did not look particularly great during the holidays, the number looks good." Perkins has, however, expressed concern about the company's profit margins due to the heavy level of discounts during the season.

Chief Executive Officer of Macy's Inc., Jeff Gennette revealed that the holiday sales benefited from strong online sales and demand for gift products, as well as a complete, revamp of about 150 stores with fresh interiors and better merchandise. According to Reuters, U.S. consumers are increasingly spending more money online rather than queuing up at physical stores during the holiday season, forcing traditional 'brick and mortar' retailers to build their apps with more shopping and delivery options.

In a report by Mastercard (NYSE: MA) on Dec. 25th, it was revealed that U.S. e-commerce sales in the period from Nov. 1 through Christmas Eve rose by 18.8%, while overall holiday retail sales, with the exclusion of automobiles, rose by just 3.4%. Prior to Mastercard's report, Apple Inc. (NASDAQ: AAPL) disclosed that its customers spent $1.42 billion in its App Store between Dec. 24 and Jan. 1, which is a 16% increase over the previous year.

It was also reported that stocks of Macy's Inc. was one of the worst performing stocks on the S&P 500 Index for the year 2019.