What happened
Shares of department store retailer Nordstrom (JWN 4.95%) rose as much as 14% this week, according to data from S&P Global Market Intelligence. Macy's (M 1.44%) advance was 16.5%. And Kohl's (KSS 2.83%) jumped by just over 18% at its high. There was strength across the retail sector, which clearly helped the stocks along. However, there was also company-specific news for each of these companies.
Image source: Getty Images.
By the end of trading on Thursday, March 17, Nordstrom was still near its weekly highs with a roughly 13.5% gain, Macy's was up just under 16%, and Kohl's had given back a little of its impressive gain, but sitting with a roughly 16% price advance.
So what
Like so many of its peers, Macy's has been trying to find a way to bridge the digital and physical divides in the retail space. That gets the fancy name omnichannel in the industry, but basically it means connecting with customers where and how they want. To that end, the company announced the launch of its "Own Your Style" campaign. Essentially, the company will offer more curated content to drive customers to its website and stores. Macy's is calling it a platform; it could turn out to be an exciting innovation if it succeeds in getting customers to become more frequent buyers.
Nordstrom's story was a bit more interesting, at least for dividend-focused investors. When the coronavirus pandemic hit, the retailer eliminated its $0.37 per-share quarterly dividend to conserve cash. That was hardly an unusual move in 2020 given the uncertainty, forced business closures, and social distancing efforts of the time. But two years later, on March 16, it announced that it would be resuming the quarterly dividend at $0.19 per share. That's roughly half the level of the previous payment. Still, the fact that the board feels confident enough to pay a dividend at all is a big step in the right direction, and investors are probably right to be pleased by the move.
The story around Kohl's is far less certain than either Macy's or Nordstrom's, but it is much more intriguing. There are rumors flying that three companies are readying takeover offers. The three names being discussed are Canada's Hudson Bay, Leonard Green & Partners, and Sycamore Partners. The last two are private equity shops, with Hudson Bay a well-known retailer both north of the border via its namesake brand and in the United States via Saks Fifth Avenue and Saks OFF 5th. With three potential suitors, investors are likely thinking that a bidding war could break out. No wonder the stock rose this week. That said, a grain of salt might be in order since this isn't the first time the retailer has been rumored to be "in play" as they say on Wall Street.
Now what
It's always hard to determine exactly how much of a stock move you can attribute to any single piece of news. That's doubly true when markets are volatile as they are right now. The news from Macy's and Nordstrom was interesting and, actually, something that investors can monitor with some clarity. For Macy's, the question is whether or not its new selling approach resonates with customers, while Nordstrom investors will want to track the company's dividend-paying ability and future dividend plans. Kohl's is a bit more up in the air since all of the acquisition hoopla could end up falling short of an actual deal. Stay tuned.
