Macy's in Trouble, Based on Holiday Sales Data

Macy’s Inc. (NYSE: M) is likely in more trouble than expected this holiday season. It remains primarily a brick-and-mortar retailer. New analysis shows that traffic to stores on Black Friday dropped more than 50% across America. If Macy’s posts numbers anywhere close to that, it will have taken a massive hit.

Sensormatic Solutions, part of Johnson Controls, released data on Black Friday store activity. “Findings indicate that shopper visits resulted in a 52.1% decline in traffic on Black Friday, November 27, compared to 2019.” The figure was a drop from the November 22 to November 27 period, when traffic dropped 45.2%.

Without question, Macy’s has moved into e-commerce, and its stock has benefited from a dose of optimism. It has risen 78% in the past month. However, the shares are down 36% so far this year. And there is every reason for the drop. Revenue in the most recent quarter was $4 billion, down from $5.2 billion in the same period the year before. Comparable store sales dropped 21% compared to 2019.

The good news was “Digital sales grew 27% over third quarter 2019. Digital sales penetrated at 38% of total owned comparable sales.” Good, but not nearly enough.

Macy’s cannot reverse the tide of a problem that has vexed and will vex most of the brick-and-mortar businesses. Its situation is bound to weaken as the year progresses, and it could end the year worse off than it was at the end of the third quarter.