Macy's (M 1.44%) continues to rebound from the devastating effects of the coronavirus pandemic. Sales trends for the department store retailer had improved every quarter since the first quarter of 2020 when it had to close all its stores temporarily. Although sales are still below pre-pandemic levels, the sustained improvement is encouraging to shareholders.

Macy's is set to report first-quarter earnings on Tuesday, May 18. Investors will want to know that the sales trend of the past few quarters continues to improve. That's why the comparable store sales metric will be what you need to pay attention to in the first-quarter earnings release.

Clothes on a rack in a department store.

Macy's is investing to grow its digital business. Image source: Getty Images.

Recovering from the pandemic

Comparable store sales figures count sales at stores that have been open for at least the last 12 months. This excludes the outsized effects that recently opened and closed stores can have on sales figures. Since Macy's closed 39 of its 727 stores last quarter alone, the comps figure will be more telling than overall revenue.

Over the long run and in normal times, Macy's targets comps sales growth in the low single-digit percentages. However, these are anything but normal times. Macy's is trying to recover from the severe negative economic effect that the coronavirus pandemic caused, so it is unlikely to hit that target anytime soon. Still, the goal seems reasonable and realistic for a company in an industry that has been suffering from what's being called the retail apocalypse (sales moving online and away from brick-and-mortar locations).

Given that secular trend, it's reassuring for shareholders to see Macy's is developing its own e-commerce channel. Over the next three years, 52% of all capital expenditures will be directed toward improving the digital shopping experience. That's up from an average 18% share of expenditures in each of the previous four years before the COVID-19 outbreak. The major shift in focus highlights that management understands it must go where the customers are if it wants to put Macy's products in front of customers. 

What this could mean for investors 

Analysts on Wall Street expect Macy's to report revenue of $4.31 billion and a loss per share of $0.44 when it reports first-quarter earnings. Management guided investors to expect revenue in the range of $4.19 billion to $4.29 billion and a loss per share between $0.55 to $0.45. Expectations on both revenue and loss per share are better than what management has guided for the quarter.

Share prices of Macy's are up about 41% year to date -- mostly in response to investor enthusiasm for stocks that will benefit from economies reopening. Indeed, Macy's will benefit as states ease restrictions on businesses, and more people get vaccinated. But the extent of the rebound is uncertain. 

For several months before the onset of the pandemic, Macy's was trading at prices in the mid-teens per share. As of this writing, Macy's is trading for just under $16 per share. The reopening rebound appears to be already priced into the stock. Investors looking for a retailer at a bargain price will have to look elsewhere for now.