Retail weakness has been a fairly unfortunate theme at this stage of the economic recovery. Not surprising, since August there has been disappointing same store sales and earnings results from retailers and apparel suppliers to nearly every consumer category from the high to the low end.
Just yesterday the market digested comp store miss from COST, an earnings miss from YUM and FDO. Back in August we got earnings disappointments from COH, M & RL on the high end, while TGT, WMT and GPS were not much better on the lower end. There have been some notable exceptions as NKE recently demonstrated the power of their brand with better than expected results in North America and China, and WFM seems to be impervious to the notion that U.S. consumers have become a tad more cautious with there cash as the stock approaches a new all time closing high.
A stock that we have not talked about much that caught my eye of late was Macy’s (M). The company’s shares have been down about 11% since their Q2 disappointment in mid August, and the stock just yesterday bounced off of an interesting intermediate support level at $42 (green line below):
What I find most interesting is that the stock trading at $43 is basically exactly in the middle of the 2013 range, btwn the 52 week low of $36.30 in Jan and the high of $50.77 July. The stock seems poised to move one way or the other, and their Q3 earnings report is likely to shed a bit of light on just how healthy their back to school sales were and what the Holiday season could bring. To suggest this is a make or break sort of report for M would be an understatement as few catalysts exist for the shares after Christmas.
Implied volatility (blue line below) just hit an 8 month high as was the case with many readings in equities over the last few weeks, while realized vol (white line) has actually come in a bit as the stock has ground lower in recent weeks. This widening spread could provide trading opportunities into the Nov earnings print.