Macy’s Shares Slump on Downbeat Retail Outlook

Macy's Shares Slump on Downbeat Retail Outlook

Macy's Shares Slump on Downbeat Retail Outlook

Macy’s shares carried on with another sharp decline, as the company printed a downbeat earnings report and an even weaker outlook for the retail industry. Price dropped below the near-term support at $35 and is eyeing the next area of interest at $23-25/share.

The 100 SMA is above the 200 SMA on the weekly chart but the gap between the moving averages is narrowing so a downward crossover is imminent. In that case, more sellers could join the fold and push for continued declines.

Stochastic is on the move down so prices of Macy’s shares could follow suit while RSI is pointing down as well. However, if profit-taking happens, price could still make a quick correction to the nearest lows at $34.45 before resuming the decline.

The department store chain posted its worst quarterly earnings report since the 2008 recession, reviving fears of a consumer sector slump in the US. This followed downbeat earnings figures from Disney, as the company had been unable to make up for weak network performance with revenues from its parks.

Sales in Macy’s stores fell 5.6% in the quarter ending April, marking their fifth consecutive quarterly decline. Macy’s reported a profit of $116 million, down 40% from $193 million a year earlier, while revenue fell 7.4% to $5.77 billion.

Management predicted same-store sales decline of between 3% and 4% for the year, compared with a 2.5% fall last year. The company also lowered its earnings per share forecast for 2016.

Macy’s shares posted their largest slump since 2008 on Wednesday, setting off a chain reaction for shares of other retail giants such as Target and Walmart. US equity indices were also dragged lower, leading the Dow 30 index and the S&P 500 to close more than 1% lower for the day.


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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.