Macy's Stock Rebounds As Consumers Spend With Abandon

In spring 2020, in the depths of coronavirus lockdowns, investors couldn't dump Macy's (M) stock fast enough. Shares fell as low as $4.38 apiece.

Photo Insert: Macy's Waterbury, CT

On Thursday, Macy's stock jumped 21% after the firm reported better-than-expected earnings. That brought gains so far this year to more than 230%. A share now costs $37.37, Julia Horowitz reported for CNN Business.

What's happening: Once out of favor as mall closures rose and coronavirus restrictions kept people at home, department stores are finding love again on Wall Street. Kohl's shares popped 11% on Thursday after it reported earnings.

The stock has rallied 54% this year. Shares of Dillard's have shot up more than 480%. What gives? First, consumer spending has surged. Shoppers say they're worried about inflation, but continue to shell out for items they held off buying last year.

Macy's — the largest US department store chain — reported revenue up 36% year-over-year. Shoppers snapped up tailored suits, luggage, and dresses.

"The consumer is healthy, and we expect the strong demand to continue, particularly as people return to work," finance chief Adrian Mitchell told analysts. Bank of America reports that spending on credit and debit cards in the week ending Nov. 13 rose 23% compared with the same period in 2019. Some of that increase is due to higher prices, according to the bank's analysts.

Macy's started planning for supply chain disruptions late last year, Cowen analyst Oliver Chen noted. That puts it in a good position to take advantage of holiday shopping this year. Department stores have also shuttered locations that weren't performing well in recent years.

Research firm CoStar said that retailers announced plans to shut more than 11,100 stores in 2020, an all-time high. In February 2020, Macy's said it would close 125 stores by 2023.

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