Wednesday’s market worries over retail faded away today as Macy’s and Kohl’s both delivered stronger than expected results.
The S&P 500 is higher by 7 points to 2,182, the Dow Jones Industrial Average is jumping by 74 points to 18,570 and the Nasdaq is being lifted by 23 points to 5,227. The S&P Retail is adding 99 cents to sell at $45.18.
Macy’s Inc. stock is rising over 14 percent to $38.78 as the department store giant said it would be closing 100 stores by early 2017 and take those saving and plow them back into better-performing stores. Macy’s managed to beat the estimates for both earnings and sales in the second quarter. Earnings were 54 cents a share, which was better than FactSet’s estimate for 46 cents and sales came in at $5.8 billion versus the expected $5.7 billion. Comparable sales improved with increased apparel selling helped by normal weather patterns and improvements in tourist traffic. Investors generally feel that Macy’s has now bottomed and is on its way to recovery.
Kohl’s Corp. stock is also moving higher by 12 percent to $42.88 after it also beat the estimates for earnings and sales. Earnings per share excluding nonrecurring items of $1.22 easily beat the FactSet estimate for $1.03. Including charges, earnings per share still climbed, to 77 cents from 66 cents. Comp sales slid 1.8 percent and total sales fell 2 percent to $4.18 billion, but this was better than the estimate for $4.16 billion. Kohl’s said juniors and young men’s was performing well and inventory management helped to achieve a strong increase in gross margins. The fiscal year guidance was cut to $3.80 to $4.00 from $4.05 to $4.25, but investors seemed to expect the cut and see the decrease as a good move to take off the pressure.
Alibaba said Thursday its first-quarter net profit slid 75 percent as it reported one-off gains in the year-earlier period while revenue climbed 59 percent, beating market expectations. The stock is rising by over 6 percent to $92.68 in early trading. The e-commerce giant said net profit for the three months ended June 30 came in at $1.08 billion — excluding the one-off disposal gains it registered in 2015, growth would have been 50 percent. Sales were $4.84 billion. The 59 percent growth represents an acceleration from the 39 percent growth registered in the fourth quarter. Investors are also pleased because it refutes the concern about the health of the Chinese consumer.