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Macy’s spin-off?  What investors need to know about a potential spin-off


Today has been a very good day for investors in Macy’s (NYSE:M). Currently, Macy’s stock is up over 20% due to intense investor interest in a possible Macy’s spin-off. That is, as intense as one would expect for a department store retailer.

Source: Joe Tabacca / Shutterstock.com

Notably, Macy’s reported much better earnings than expected today. Both revenue and earnings exceeded analysts’ estimates, pushing the stock higher. The company noted comparable sales growth of over 35%. Analysts expected revenue growth of just over 29%.

In the end, that beat was even more pronounced. Adjusted earnings per share came in at $ 1.23, against estimates of just 31 cents. As a result, many bullish M-share investors remain confident that this impressive economic environment can continue into the fourth quarter. The company has raised its expectations for the whole of 2021, supporting this view.

However, there were a few other bombs dropped during this earnings report that added fuel to this fire. Let’s dive into what investors are watching right now with Macy’s.

Macy’s potential spinoffs and digital marketplace boost M share

A higher and lower pace as well as an increase in outlook is certainly enough for most stocks to experience a marked increase in interest. However, there is one more catalyst that investors seem to be watching with Macy’s right now.

The company has suggested that it may consider launching a digital marketplace in 2022. Few details were given on what that digital marketplace would look like. However, the company noted that it had hired a consulting firm Alix Partners to review Macy’s corporate structure.

What this means is unclear. However, many investors believe this could be a step towards restructuring the business and separating digital operations from the company’s physical stores. Vocal activist investors pressured management to make such a decision. As a result, it appears to be a step in that direction.

Of course, nothing is set in stone. And if anything, Macy’s is still in the early stages of considering such a decision. However, investors seem optimistic about the value that could be created from such a fallout. As a result, M-stock is all the rage today, which is a rather unusual surprise, but welcome to investors.

As of the publication date, Chris MacDonald does not have (directly or indirectly) any position in any of the stocks mentioned in this article. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.


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