What Happened?
Shares of department store chain Macy’s (NYSE: M) jumped 17% in the afternoon session after markets rallied sharply on news that President Trump announced a 90-day tariff pause. Reciprocal tariffs were also dropped to 10% for most countries, sparking renewed optimism amid ongoing trade talks. The major stock indices rose as investors, growing impatient of seemingly irrational tariff actions, welcomed the pause as a sign of a more measured path forward.
However, Trump was quick to note that China was not part of the pause. Instead, he prepared to raise tariffs on Chinese goods to 125% after China announced retaliatory tariffs on US imports. This tough stance on China stood in sharp contrast to the softer tone toward others. In a week marked by growing uncertainty, this news eased some of the pressure. The questions remain whether we are out of the woods and can sustain the rally or not.
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What The Market Is Telling Us
Macy’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock dropped 15.3% on the news that the company announced the termination of acquisition discussions with Arkhouse Management and Brigade Capital Management. In March 2024, Arkhouse Management and Brigade Capital submitted a proposal to acquire all outstanding shares of Macy's they don't already own for $24.00 per share in cash. Macy's Board concluded that the proposal lacked "certainty of financing at a compelling value."
Moving on, Macy's announced a new strategy dubbed "A Bold New Chapter." It noted that the strategy involves "strengthening the Macy's brand, accelerating luxury growth and simplifying and modernizing end-to-end operations." Overall, the announcement implied there was no certainty investors would be able to sell their shares at the previously stated offer price.
Macy's is down 29.4% since the beginning of the year, and at $11.71 per share, it is trading 42.6% below its 52-week high of $20.38 from May 2024. Investors who bought $1,000 worth of Macy’s shares 5 years ago would now be looking at an investment worth $1,756.
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