Kohl's and Macy's Rise as Retail Rotation Continues
Retail stocks are seeing a rotation back toward discounted department store names. Kohl’s (NYSE: KSS) is up nearly 7%, reversing last week’s post-earnings selloff, while Macy’s (NYSE: M) gains about 3%. Abercrombie & Fitch (NYSE: ANF), which had surged earlier this summer, slips by around 2% as investors trim positions to fund the rotation. The SPDR S&P Retail ETF (XRT) is up slightly at 0.8%, indicating a selective rather than broad-based rally. Kohl’s reported strong second-quarter earnings with net income of $151 million and raised its full-year guidance, but sales declined by nearly 1%. Management cited softer performance from in-store Sephora locations due to expanded brand distribution outside Kohl's. Despite the EPS beat, investors initially sold off shares after the report before reversing course this week. The market is differentiating between cheap laggards and high-momentum names within retail. Kohl’s had dropped 11% year-to-date through Tuesday while Abercrombie & Fitch surged over 40% in a month, making it vulnerable to profit-taking.
Topics: earnings_reversal retail stock_prices