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Why Macy's and Other Retail Stocks Are Trading Higher Today

By John Rosevear – Updated Jun 5, 2020 at 3:50PM

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Unemployment isn't as bad as expected, but it's still not good.

What happened

Shares of consumer-discretionary retail operators were trading higher on Friday on growing investor optimism after new data indicated that the unemployment rate in May was better than expected. 

Here's where things stood for these companies' stocks as of 3:15 p.m. EDT, relative to their closing prices on Thursday:

  • Bed Bath & Beyond (BBBY -1.62%) was up about 8.1%
  • Designer Brands (DBI 0.46%) was up about 8%
  • Kohl's (KSS -0.75%) was up about 13%
  • Macy's (M -1.07%) was up about 6.9%
  • The TJX Companies (TJX 1.27%) was up 3.2%

So what

The day started off with good news: Unemployment figures for May were not as bad as expected. 

The U.S. Bureau of Labor Statistics reported on Friday morning that total non-farm employment rose by 2.5 million jobs in May, driving the unemployment rate down to 13.3% from 14.7% in April. While that's still very high, most analysts had expected a steep decline in total jobs. 

A Macy's sign on the outside of a store.

Macy's has reopened many of its stores, but some may close again -- for good -- later this year. Image source: Macy's.

Clearly, for businesses that depend on consumers spending discretionary income, better-than-expected employment figures count as good news -- and for these companies' beaten-up stocks, the good news was driving sizable gains on Friday. 

All five of these companies were forced to close most of their brick-and-mortar stores in March, depriving them of much of their revenue. While some were able to make up some of the difference via online sales, all took big financial hits. 

Now, with stores reopening around the country, and with employment starting to recover, things are looking a lot better: That's why the stocks were up today.

Now what

While the economy (and these companies' sales) may be recovering, it's far from recovered, and there will be more challenges ahead. Macy's, for instance, was restructuring before the pandemic, and some difficult store closings are coming. Many retail chains, including Bed Bath & Beyond, stopped paying landlords amid coronanvirus struggles: What happens now?

Simply put, while the news is good, there are still lots of reasons for investors to be cautious with these stocks. Trade carefully.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends Designer Brands Inc. and The TJX Companies. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Kohl's Corporation Stock Quote
Kohl's Corporation
$25.15 (-0.75%) $0.19
Macy's, Inc. Stock Quote
Macy's, Inc.
$15.67 (-1.07%) $0.17
Bed Bath & Beyond Inc. Stock Quote
Bed Bath & Beyond Inc.
$6.09 (-1.62%) $0.10
The TJX Companies, Inc. Stock Quote
The TJX Companies, Inc.
$62.12 (1.27%) $0.78
Designer Brands Inc. Stock Quote
Designer Brands Inc.
$15.31 (0.46%) $0.07

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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