Macy's Missing The Mark
The day after Christmas there was a report that talked about spending during the holidays, the time between Black Friday and Christmas:
A robust shopping season from before Thanksgiving through Christmas has given retailers much to cheer about this year. According to Mastercard SpendingPulseTM, which provides insights into overall retail spending trends across all payment types, including cash and check, holiday sales increased 5.1 percent to more than $850 billion this year – the strongest growth in the last six years.
Apparently, Macy’s wasn’t part of that report. Macy's said its sales slowed after a good start to the holidays, and flagged particular weakness in women's sportswear, sleepwear, fashion jewellery, fashion watches and cosmetics. They also slashed their full-year profit and sales forecast. On that news the stock fell more than 15%.
Macy's guidance for fiscal 2019 earnings now sits at $3.95-$4.10 versus the $4.10-$4.30 given two months ago and analysts at Bank of America thinks their earnings will be even lower at $2.88.
I shorted Macy’s in 2017…rode it from the $30s to $18 using put options. So Macy’s and I have a good relationship.
With the economy decelerating and when consumers start to tighten up their belts again, I expect further downside risk, lets go to the charts to see how low price can go.
On the monthly chart, price has formed a lower-high and a lower low.
However, what's key is price couldn't take out the two pivot highs at $45.
Thus, the chart suggests price will head down to the monthly demand at $12.
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
The department store business model is on its way to disappearing altogether as they have an inefficient model given the amount of retail space alone.
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I would like to short Macy, but need to wait for a pull back first.