What happened
Shares of several brick-and-mortar retailers were trading higher on Wednesday morning as the broader market rallied for a second day on rising optimism about the post-pandemic economy.
Here's where things stood for these four companies' stocks as of 10:45 a.m. EDT, relative to their closing prices on Tuesday.
- Designer Brands (DBI 3.13%) was up 5.2%.
- Gap (GPS +0.48%) was up 5.5%.
- Kohl's (KSS 0.68%) was up 5.5%.
- Macy's (M +0.27%) was up 8.4%.
So what
The broader U.S. markets were trading higher on Wednesday morning amid signs that the White House and Congress may be moving toward an agreement on additional measures to bolster the U.S. economy amid historically high unemployment. Stocks of companies that have been hit the hardest by the effects of the coronavirus pandemic, including airlines, travel stocks, and retailers, were among the best performers.
Image source: Macy's.
There was no company-specific news driving any of these four retailers' stocks on Wednesday. But Macy's drew considerable interest from consumer-discretionary investors on Tuesday, when it announced a refinancing plan that should give it sufficient liquidity to weather the downturn while continuing its restructuring efforts.
Macy's said on Tuesday that it is offering $1.1 billion in senior notes secured by some of its real estate assets. It will use the proceeds of that offering, plus some additional cash on hand, to pay off its $1.5 billion revolving credit line. Once that debt is retired, it said, it will enter into an agreement for a new $3 billion credit line secured by the majority of its inventory.
That plan is arguably good news for the entire retail sector. While the department store giant had to pledge assets to secure funds, the deal shows that the credit markets remain open to retailers -- even retailers like Macy's, which had been struggling before the onset of the pandemic.
Image source: Kohl's.
Meanwhile, Kohl's reported last week that it lost $541 million in the fiscal quarter that ended on May 2, a worse result than Wall Street had expected, but said that it is continuing to reopen stores and that its online sales had held up better than expected while its brick-and-mortar locations were closed.
Now what
While Kohl's reported earnings last week, investors can look forward to updates from the other three companies in the not-too-distant future. Gap will report its fiscal first-quarter results after the market closes on June 4, Macy's will report next on July 1, and while Designer Brands hasn't yet announced a date for its fiscal first-quarter report, it's expected to arrive within the next couple of weeks.
