Believing In Macy’s Is Paying Off For Investors

Amazon has had a very good year on the market, its stock price up 46 percent year on year, something that doubtlessly pleases those who have invested.

However, arguably having an even better run are Macy’s investors, who have seen stocks perk up a whole 56 percent this year in the long-embattled — but now corner-turning — department store retailer, according to Financial Times.

Macy’s isn’t the only brick-and-mortar retailer that has seen a bit of a boost lately. Kohl’s shares are also sharply up on the year – 42 percent.

For Macy’s though, the strength of the figures a bit more dramatic because of the size of the turnaround. In 2017, Macy’s saw its stock price shed about a third of its value as declining foot traffic, slugging in-store sales and reduced margins on goods ordered online depressed the retailer’s profitability. The consensus wisdom about Macy’s — and much of the rest of brick-and-mortar retail — was that it was an idea past its time, and one inevitably heading to the dustbin of history.

In 2018, however, analysts and investors are looking more carefully at the segment and have been more focused on firms where their efforts at a turnaround have some appealing features. Macy’s — along with Target, Kohl’s and Walmart — makes that list.

“When growth is abundant in a sector, investors tend to buy the cheaper stocks,” said Max Gokhman, head of asset allocation at Pacific Life Fund Advisors. “Given the relative cheapness of brick-and-mortar names versus eCommerce, it thus makes sense that they’d begin to outperform when consumer sentiment and spending accelerates.”

Gokhman further noted that, though he thinks brick-and-mortar does, in fact, have a lot more gas left in its tank than it is given credit for, he does not believe the current rapid momentum will end up being sustainable growth.