On 15 August 2018, the US department store operator Macy's announced its earningsfor the second quarter of the year. Despite outperforming analysts' expectations, Macy's stock tumbled more than 14 percent.
For Q2, ended on 4 August, net income totalled $166 million compared to $111 million for the same period in 2017. Macy's earned $0.70 diluted earnings per share, going far beyond analysts' expectations of $0.51 per share.
Tax reform and employment growth have encouraged consumer spending. However, Macy’s net sales dropped 1.1% to $5.572 billion in the second quarter of 2018 against $5.636 billion in 2017. The retailer’s stock price also demonstrates that it keeps losing market share to the main competitor of traditional retail – Amazon.com.
Macy’s stock increased more than 100% from a year ago, bringing the retailer market cap of $12 billion. Since November, the share price has more than doubled, which could have encouraged investors to lock in their profit by selling some of their Macy’s stock. This may have led to the price decrease of over 14% on August 15.