Macys and JC Penney Report Weak Quarters – And Their Stocks Surge

May 15, 2008 at 12:30 pm  ·  Category: Macro Economics, Sentiment Analysis, Stocks

Yesterday Macy’s (M) reported 1st quarter earnings.  They reported earnings of 2 cents a share on a continuing basis compared to 16 cents last year.  Sales were down 3% and same store sales down 2.6% (M Earnings Release).

The stock surged 3.6% on the day.

This morning JC Penney (JCP) reported results.  Net income was down 50% on a 5% sales decrease and 7.4% same store sales decline (JCP Earnings Release).

The stock is up 5% today.

I dunno.  If I was a stockholder, I’m not too excited about these numbers.  Business is obviously slow.  Profitability is getting hit.  I guess they beat “expectations” but from an absolute standpoint these numbers suggest a tough business environment.

But it’s a very favorable sentiment environment right now.  People are feeling good about stocks.  And really that’s what it comes down to.

Disclosure: Top Gun has no position in Macy’s (M) or JC Penney (JCP) shares.

UPDATE (Fri 5/16, 11:00am PST): The WSJ Online’s MarketBeat blog cited this post yesterday.

Posted by Greg Feirman  ·  Trackback URL  ·  Link
No Responses to “Macys and JC Penney Report Weak Quarters – And Their Stocks Surge”
  • With banks paying extremely low interest rates,realestate in a tumble,gas rising probably makes for a good stock market………companies are raising their prices and cutting the size of their products……this leads to exceptable profits for the near term………….

    Penney’s is the place to shop for Value and quality,they have been around for well over a century

    Bill  ·  May 15, 2008 at 1:03 pm  ·  Permalink
  • It doesn’t lead to exceptional profits. With falling home prices and rising gas prices, consumers are squeezed by decreasing net worth, lack of access to home equity and higher gas costs. That leaves less for them to spend at places like Penney – which is why Penney’s profits fell by 50% in the just completed quarter.

    One company I do think all this benefits is Walmart as people have to buy certain things and Walmart is the cheapest place to do it. And their results bare out that this is happening.

    Greg Feirman  ·  May 15, 2008 at 2:02 pm  ·  Permalink

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