Stock Story -
What Happened: Shares of department store chain Macy’s (NYSE:M) jumped 5.4% in the morning session as the major indices soared (Nasdaq +1.9%, S&P +1.2%) after Walmart (NYSE:WMT)'s earnings and retail sales data revealed strong consumption patterns in the U.S. economy.
Walmart exceeded analysts' revenue and EPS expectations in Q2'2024. Moving on, the company raised its full year outlook for net sales and EPS as well, another major positive.
CFO, John David Rainey added "We see, among our members and customers, that they remain choiceful, discerning, value-seeking, focusing on things like essentials rather than discretionary items, but importantly, we don't see any additional fraying of consumer health." After the initial pop the shares cooled down to $16.86, up 4.9% from previous close.
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What is the market telling us: Macy's’s shares are quite volatile and over the last year have had 19 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about a month ago, when the stock dropped 15.3% on the news that the company announced the termination of acquisition discussions with Arkhouse Management and Brigade Capital Management.
In March 2024, Arkhouse Management and Brigade Capital submitted a proposal to acquire all outstanding shares of Macy's (NYSE:M) they don't already own for $24.00 per share in cash.
Macy's Board concluded that the proposal lacked "certainty of financing at a compelling value."
Moving on, Macy's announced a new strategy dubbed "A Bold New Chapter" strategy. It noted that the strategy involves "strengthening the Macy's brand, accelerating luxury growth and simplifying and modernizing end-to-end operations."
Overall, the announcement implied there is no certainty investors would be able to sell their shares at the previously stated offer price. This uncertainty drove the decline in the stock's price.
Macy's is down 14.5% since the beginning of the year, and at $16.86 per share it is trading 21.7% below its 52-week high of $21.54 from March 2024. Investors who bought $1,000 worth of Macy's’s shares 5 years ago would now be looking at an investment worth $1,044.
