On Wednesday, Macy’s (NYSE: M) stunned investors with its first-quarter report, growing both sales and profit faster than expected. No discount tags on Macy’s stock, it rocketed up by 10%.
What does this mean?
Strong sales over the holiday period provided a rising tide that lifted the boats of all retailers in the US. For Macy’s, this was the icing on the cake of its turnaround under a new CEO.
Some observers thought Macy’s would struggle to grow in 2018 after its rockstar 2017 (after all, it’s still losing market share to a certain company that shares its name with a rainforest) but Macy’s stores all performed well. Quarterly sales at stores that were open a year ago grew by 4% (investors only expected 1% growth) and the company’s hiked its profit expectations for 2018 as a result.
Why should investors care?
The bigger picture: Other retailers haven’t been so lucky.
While the sun’s shining on Macy’s, some department stores are stuck under a cloud. Lord & Taylor has hired advisors to guide it to fairer weather. They’re probably considering options ranging from shutting stores to an outright sale. Across the pond in the UK, retailers like Poundland are considering whether to halt bankruptcy plans in favor of a sale. And fashion empire Arcadia, owner of Topshop and Miss Selfridge, is contending with a 40% slump in its annual profit.
For markets: The Burberry turnaround is on track.
Burberry’s another retailer on a quest to refashion its recent chequered fortunes. By the end of 2017, the UK luxury company had installed a new CEO and creative director (which is important because they’re often credited with successful luxury brand turnarounds – like at Gucci). Burberry’s better-than-expected results on Wednesday sent the stock up by 4%, stoking investors’ belief in its new approach of focusing on higher-end products and customers.
This article was originally published by finimize.