What's going on?

American department store chain Macy�s may have bagged itself strong earnings last quarter � but overall US retail sales figures for April disappointed investors on Wednesday (tweet this).

What does this mean?

Macy�s reported profit on Wednesday that was well ahead of investors� expectations, drastically lowered following a black Christmas. Online sales growth was particularly strong, with mobile transactions now accounting for 4% of total sales.


Nevertheless, Macy�s sales remain lower than this time last year � and the company doesn�t expect them to get any bigger this year either. Inventory remains a challenge, with even more unsold stock currently lying around than Macy�s had at the end of last year. The success of plans to overhaul systems, cut management jobs, and save $100 million is therefore crucial.

Why should I care?

For markets: Trade wars hit traders.

April�s US retail sales failed to impress � they fell 0.2% compared to the month before as American consumers tightened their purse strings, and manufacturing slowed too. That decline was unexpected, given stellar March sales growth of 1.7%. But the ongoing US-China trade dispute ��and accompanying higher prices for certain goods � may have had something to do with it. Already-struggling retailers like Macy�s may not be shaking the Stars �n� Stripes too vigorously…

Zooming out: Alibaba reaches the clouds.

Chinese ecommerce giant Alibaba reported blockbuster quarterly earnings on Wednesday. Unlike Macy�s (or even Amazon, which it�s now beaten back from China) the country�s biggest online retailer achieved sales growth of 51% compared to the same period last year. The bulk of profit growth, however, came from growing demand for Alibaba�s cloud computing services. And a slump in Chinese retail sales in April � which recorded their slowest growth for 16 years � will be a concern for the company; although unlikely to keep it from enthusiastically waving the Five-starred Red Flag.