Shares of several upscale retail-chain operators were rising on Tuesday, on growing investor optimism after Macy's (NYSE:M) announced a significant refinancing deal.
Here's where things stood for these three companies' stocks as of 11:30 a.m. EDT, relative to their closing prices on Friday:
- Nordstrom (NYSE:JWN) was up 5.8%
- Ralph Lauren (NYSE:RL) was up 10.2%
- Urban Outfitters (NASDAQ:URBN) was up 4.5%
News that troubled department-store giant Macy's has secured a major refinancing deal seemed to be giving investors reason to bid up battered retail stocks on Tuesday.
Macy's said it is offering $1.1 billion in bonds to pay off its existing line of credit, after which it will enter into a new $3 billion revolving-credit deal. While both the bonds and the new line of credit will be secured by Macy's assets (real estate for the bonds, inventory for the credit line), the news showed investors that the credit markets remain open for retailers -- even retailers that were struggling before the COVID-19 outbreak forced many U.S. stores to close.
Investors might also be drawing guarded optimism from a related regulatory filing by Macy's, in which it said it had about 270 stores open as of last Friday, with sales running at about 50% of year-ago levels. That 50% level may not sound great, but it's better than Macy's -- and many analysts -- had expected.
More broadly, there are signs that Wall Street opinions are coalescing around this view: The first quarter was bad for department stores and apparel companies, the second quarter will be worse, but things will improve after that.
That tracks with what we heard from the first of these three companies to report earnings. Urban Outfitters said last week that its net sales were down 31.9% from a year ago in the fiscal quarter that ended April 30. But it could have been worse: While its physical stores were closed for about half of its quarter, online sales helped offset the impact.
The company said it had 63% more first-time online customers in the quarter versus a year ago. It reported a preliminary net loss of $138 million, or $1.41 per share, for the period.
Consumer-discretionary investors are probably also looking forward to earnings reports from the other two companies, which are both due this week. Ralph Lauren will report results for the quarter ended March 28 before the market opens on Wednesday, May 27; Nordstrom will report its results for the quarter ended May 2 after the market closes on Thursday, May 28.