Shares of Ascena Retail (ASNA) are surging on Wednesday along with other retail names after Macy's (M) quarterly report gave hope to investors. Macy's Q1 results surpassed expectations on most measures. Macy's maneuvered a 3.9% jump in comparable sales on an owned basis, resulting in an almost 4% increase in revenue. Adjusted earnings per share of 42c in Q1 was up from 12c during the prior-year period. Analysts were expecting 35c. As a result, Macy's raised its 2018 EPS view to $3.75-$3.95, much higher than the $3.61 that analysts were forecasting. POSITIVE FOR RETAIL PEERS: Jefferies analyst Randal Konik said he liked Macy's "robust" revenue growth, clean inventories and controlled markdowns in the first quarter, though he also noted that Q2 comparable sales were expected to be down given the Friends and Family shift that aided Q1. Following the earnings report, Konik raised his price target on Macy's shares to $30 from $27, but he kept a Hold rating on the stock, citing secular pressures impacting the company and the industry. The analyst, who thinks Macy's report had a positive read-through for retail more broadly, continues to prefer Kohl's (KSS), citing its off-mall positioning, differentiated assortment, and "omni-channel leadership." PRICE ACTION: Shares of Ascena Retail Group are up 15.8% to $3.30 per share, while Macy's is up 11% to $33.20 per share in afternoon trading. OTHER RETAILERS FOLLOW: Shares of other companies in the space, including Express (EXPR), Francesca's Holdings (FRAN), Tilly's (TLYS), and Zumiez (ZUMZ), are all higher in afternoon trading.
