The retailer's lackluster earnings are mostly attributed to coronavirus shutdowns
The shares of Macy's Inc (NYSE:M) are down 5.2% to trade at $6.52 this afternoon, after the retail giant reported a first-quarter profit and revenue losses on par with expectations, mostly attributed to coronavirus shutdowns. The health crisis forced the retailer to tap credit lines, lay off thousands of employees and suspend dividends and buybacks in order to stay afloat. Though company officials said they expect the pandemic to continue through 2020, they do not anticipate another shutdown and are working towards a gradual sales recovery by implementing digital business efforts and services such as curbside pickup.
The effects of the pandemic have been particularly harsh on Macy's stock, which has been on a steady decline since 2018. Since dropping to an an all-time-low of $4.38 on April 2 and being booted from the S&P 500, the shares have fought back to tack on 48% in the last three months. In June, the equity was mostly supported by its 60-day moving average, which contained most of the stock's pullbacks in recent weeks, even as the equity found overhead pressure at the $9 mark. Longer term, M is down 68.8% year-over-year.
Given the 12-month deficit, it's no surprise analysts are cautious of M coming into today, with seven of the 11 in question carrying a tepid "hold," and the rest calling it a "sell" or worse. Meanwhile, the consensus 12-month price target of $6.54 is a 1.2% discount to current levels. And while short interest is down 1.7% in the last two reporting periods, the 129.71 million shares sold short make up a hefty 42.2% of M's available float, or 2.9 times the average daily trading volume.
That sentiment is not carried through to the options pits, where calls are popular. As of today, 66,000 calls and 36,000 puts have crossed the tape -- slightly higher than is usually expected at this point. The most popular position by far is the weekly 7/2 7-strike call, with positions are currently being opened, followed by the 7-strike put contract in the same series.