Yahoo Finance Live's Julie Hyman and Brian Sozzi break down Macy's earnings beating quarterly expectations, as executives try to do good on promises of wage increases and prosperity through the supply chain crunch.

Video Transcript

JULIE HYMAN: Well, if a company could be a frenemy with one of our reporters, anchors that would be Macy's and Brian Sozzi, I think. Macy's shares are up 14% this morning after the company came in with results that were stronger than estimated. Comparable sales up by 37%-- of course, coming from a very low base year-over-year. Soz, what's also quite interesting here is that there's an activist campaign involved with the company, and they sort of alluded to it on the conference call.

BRIAN SOZZI: I just want to set the record straight here, Julie. Analyst Brian, which was about seven or eight years ago now, my former life, I probably would have upgraded Macy's stock about six months ago. I mean, there were a lot of catalysts here. The stock up trade after the pandemic, them closing a lot of stores, save on expenses. So that's that. The journalist Sozzi that is now in front of you today has been a lot more critical of Macy's here. I just-- I still get the sense this management team doesn't know what it's doing.

But perhaps that is starting to turn-- Macy's noting on the earnings call today that it's still ongoing here. They are evaluating e-commerce and store operations and have hired AlixPartners to help with that process. AlixPartners has an extensive retail coverage that helps retailers, how they can unlock shareholder value. And this appears to be Macy's bowing to pressure from activist investor JANA that came out and attacked them late in October, saying, hey, guys, it's time to follow the road of Saks and split your e-commerce operations away from your stores and get in multiple-- on that e-commerce business, more in line with something like Amazon.

And Macy's kind of fed this notion this morning, Julie. In a separate announcement, they said they're launching a marketplace business for their online business. Now, it will be weird, I think, at some point, if you're buying a big, juicy, fat steak off of macys.com. But nonetheless, they're going to try to grow their marketplace, like Walmart's doing, like Target is doing, as these retailers try to compete with Amazon, which is known as a one-stop destination to fill up everything in your house.

But the definitely intriguing news for Macy's here, which is overshadowing their earnings-- I mean, their earnings came in much better than expected. They raised their holiday quarter outlook. Same store sales up by double-digit percentages in all businesses. Pretty good quarter.

JULIE HYMAN: Yeah, it does seem like a good quarter. I mean, it's always fascinating to me when you go to the activists and hear that it's trying to do that kind of action and you have to wonder, is it engineering or is there a strategic argument to be made? And I think you're asking the right questions with regard to that.

BRIAN SOZZI: It's financial engineering. These are types of transactions I have not seen before in my career, and now suddenly, you have a lot of activists and portfolio managers out there with positions in these companies pushing these retail executive teams, which have historically been very slow to evolve-- they want to stick to their strategy, they only know how to do one thing in many cases. But now, that tide seems to be turning, and welcome to the great age of financial engineering in the retail space.

JULIE HYMAN: Yeah. One other comment I just wanted to make when it comes to the labor shortage, right? The company said recently it was going to raise its average-- raise its hourly wage to $15 an hour. It's offering new education options to its employees as well. And what's interesting here, as well, apparently, "The Washington Post" recently reporting that the company is asking corporate employees to volunteer for shifts at its stores. Which makes sense, right? You want people who were in management to sort of--

BRIAN SOZZI: Julie, hold on.

JULIE HYMAN: --get an idea of what's happening on the ground, no? No?

BRIAN SOZZI: If I see Macy's CEO Jeff Gennette folding clothes in my local Macy's, I will take you out to whatever dinner you want to go. I will take that photo. You just name the place, I will take you out. Because there's no way the top 10 executives at Macy's are going to be folding clothes this holiday season. I appreciate what they're trying to do. It's a good PR stunt. But let's get real here. Come on.

JULIE HYMAN: I would-- actually, I would love to see that happen at every single company.

BRIAN SOZZI: I would love it! I would love it.

JULIE HYMAN: Right? I mean, it makes--

BRIAN SOZZI: And I would encourage them to send me the photo.

JULIE HYMAN: --makes so much sense.

BRIAN SOZZI: I would love to share it. I would love to share it.

JULIE HYMAN: Isn't that-- wasn't there a TV show about that? "Undercover Boss." Is that still around?

BRIAN SOZZI: It was all for the likes. It is around, yes.

JULIE HYMAN: All for the likes. Yes, it's true. What we need is actual-- them doing it for the actual knowledge of what's happening on the ground at their companies. All right.