Why Macy's (M) Shares Are Trading Lower Today

What Happened:

Shares of department store chain Macy’s (NYSE:M) fell 14% in the morning session after the company reported second quarter earnings results. Its full-year revenue and earnings guidance was lowered, missing Wall Street's estimates. Management noted that the new guidance reflects "a more discriminating consumer and heightened promotional environment relative to its prior expectations." 

On the other hand, revenue came in roughly in line with expectations during the quarter, while EPS beat by a more convincing margin. Overall, this was a weaker quarter due to the outlook.

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What is the market telling us:

Macy's’s shares are quite volatile and over the last year have had 20 moves greater than 5%. But moves this big are very rare even for Macy's and that is indicating to us that this news had a significant impact on the market’s perception of the business. 

The previous big move we wrote about was 6 days ago, when the company gained 5.4% on the news that the major indices soared (Nasdaq +1.9%, S&P +1.2%) after Walmart'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."

Macy's is down 21.3% since the beginning of the year, and at $15.56 per share it is trading 27.8% 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 $1,011.

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