- Up until 2020, Macy's consistently reported higher margins than Dillard's.
- Both department store chains' margins have soared relative to 2019, but Dillard's has dramatically leapfrogged Macy's in terms of profitability.
- Dillard's stock now trades at a significant premium to Macy's shares, indicating that investors expect Dillard's to maintain a massive margin advantage going forward.
- If anything, Macy's is better positioned to weather a volatile economic climate than Dillard's.
- Dillard's high short interest represents the main risk to a long Macy's/short Dillard's pair trade.
For further details see:
Pair Trade: Buy Macy's, Sell Dillard's