Bulletin
Investor Alert

New York Markets Open in:

May 15, 2021, 10:25 a.m. EDT

Department-store shares soar after clothing sales jump more than 700% from April 2020

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Macy's Inc. (M)
  • X
    Nordstrom Inc. (JWN)
  • X
    Kohl's Corp. (KSS)

or Cancel Already have a watchlist? Log In

Tonya Garcia

Department store stocks got a big lift on Friday after U.S. Census data showed a year-over-year 726.8% jump in clothing and clothing accessory sales during April 2021.

Macy’s Inc. /zigman2/quotes/201854387/composite M +2.60% , which reports its first-quarter earnings on Tuesday, saw its stock jump 14.4%. Luxury department store Nordstrom Inc. /zigman2/quotes/203902116/composite JWN +3.17% was up 10.2%. And Kohl’s Corp. /zigman2/quotes/210414114/composite KSS +6.10% was up 8.2%.

See: Sales at U.S. retailers fall flat in April as stimulus boosts fades

Department stores were in a slump even before the COVID-19 pandemic. During the pandemic, they have taken steps to strengthen their positions.

Nordstrom has focused on its active assortment with the addition of the Tonal home gym system and an athletic microsite.

Kohl’s, which did battle with an activist investor group during the pandemic, launched its first private-label athleisure brand , added some big fashion names to the merchandise lineup, like Tommy Hilfiger and an upcoming partnership with Sephora , and says it added millions of new customers .

And Macy’s just announced a proposed upgrade to the area around its New York City flagship location in Herald Square, as well as the addition of corporate work space.

Also: Macy’s proposes $235 million NYC neighborhood upgrade and office tower addition to its flagship store

Still, UBS analysts rate Macy’s stock sell heading into the earnings report. UBS has an $8 price target on Macy’s shares.

“Macy’s has major disadvantages vs. peers around price, product, and service. We believe these dynamics should lead to major share loss and margin pressure,” analysts said.

Even with the tremendous recovery in clothing sales in the past year, analysts reacted cautiously to the overall result. Overall U.S. retail sales were flat for April after a big jump in March.

“The April figures present a generally positive picture of the U.S. economy but illustrate that the economic recovery in the first half of the year remains fairly gradual,” said Andrew Viteritti, lead for commerce and regulation at The Economist Intelligence Unit,  the research division of The Economist Group and sister company to The Economist publication.

“We expect consumer spending to pick up substantially by the second half of the year, reflecting increasing rates of vaccination and the easing of coronavirus restrictions, which together will release pent up demand. This will enable the U.S. economy to recover to its pre-pandemic output levels this year, with real GDP growth of 6%.”

Neil Saunders, managing director at GlobalData, says the rise is “logical” given the conditions in 2020.

Also: Ralph Lauren is back in style and showing increased top-line potential

“For over a year, consumers have reduced their spending on categories like apparel and they are now playing catchup – refreshing their closets as society reopens and activities like travel and entertainment become realistic,” he said.

Looking ahead, he anticipates a possible shift in spending as consumers settle into post-COVID activities.

“As we enter summer, it is likely more households will start to travel and vacation. Offices will also start to open back up – to some degree – and commuting will come back. This spend will potentially compete with retail, especially if gas and travel prices are elevated,” he said.

The ProShares Decline of the Retail Store ETF /zigman2/quotes/200757065/composite EMTY -2.22% has slumped 28.3% for the year to date. The SPDR S&P Retail ETF /zigman2/quotes/206947004/composite XRT +2.10% is up 45% for the period. And the benchmark S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.40% has gained 11.3% for the period.

/zigman2/quotes/201854387/composite
US : U.S.: NYSE
$ 18.18
+0.46 +2.60%
Volume: 10.72M
June 21, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$5.52 billion
Rev. per Employee
$239,027
loading...
/zigman2/quotes/203902116/composite
US : U.S.: NYSE
$ 32.91
+1.01 +3.17%
Volume: 3.49M
June 21, 2021 4:00p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
$5.07 billion
Rev. per Employee
$172,823
loading...
/zigman2/quotes/210414114/composite
US : U.S.: NYSE
$ 53.57
+3.08 +6.10%
Volume: 3.29M
June 21, 2021 4:00p
P/E Ratio
21.31
Dividend Yield
1.87%
Market Cap
$7.89 billion
Rev. per Employee
$145,045
loading...
/zigman2/quotes/200757065/composite
US : U.S.: NYSE Arca
$ 16.49
-0.37 -2.22%
Volume: 3,985
June 21, 2021 4:10p
loading...
/zigman2/quotes/206947004/composite
US : U.S.: NYSE Arca
$ 93.60
+1.92 +2.10%
Volume: 2.13M
June 21, 2021 4:00p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
4,224.79
+58.34 +1.40%
Volume: 2.04B
June 21, 2021 5:12p
loading...

This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.