Perhaps Wall Street missed the memo "Sell the news." Macy's (NYSE: M), the largest department store company in the country, beat analyst estimates by roughly 5.2% with a fourth quarter adjusted profit of $1.06 per share. Punters sent shares up smartly on the news, over 4%. That same morning, we got the worst CCI numbers on record -- below the 30-point range. The Piqqem Sentiment on Macy's has flat-lined after some uptick, implying today's swing could be a dead-cat bounce.
Meanwhile, shoppers are apparently fleeing department stores as the cold fingers of the economy continue to freeze their wallets. It's very hard for me to reconcile bullish sentiment on a semi-upscale department store with an environment where consumers are more fearful than anyone has seen since the Great Depression.
At a minimum, customers will not be willing or able to pay rack-rate prices for clothes, house and kitchen wares that Macy's needs to sell in order to break even, let alone thrive. At worst, the upcoming quarters will be even bleaker than the X-mas fiasco with Joe Consumer battening down the hatches and switching to rice, beans, and catfood mode.
While some economist are pegging an economic recovery starting late in the second half, the reality is buyers may not come back until well into a recovery because asset prices have fallen so much and people are feeling acutely poorer. Getting them to part with their greenbacks will be a Herculean task that department stores struggled with even in the boom times before the Great Housing Crash. Still, it's nice to enjoy a tiny bit of short-lived retail sunshine amidst the frozen gloom.
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