Retail

Macy's: America's Worst Big Retailer

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It is hard to imagine that any retailer, other than those already ruined (such as Bed Bath & Beyond and Gap), could still have a share price down more than 40% this year. Even Target, which posted horrible results and said there was more to come, has dropped 30%. Its slide has leveled off, perhaps because of holiday season optimism. The loser among the nation’s larger retailers is Macy’s Inc. (NYSE: M). Its stock has dropped about 40% this year and continues to slide.

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Among other things, Macy’s may have become too small to compete with rivals that have much larger store counts. Macy’s and its brands have 725 locations. Of these, 511 carry the Macy’s brand. Management claims people “continue to shop Macy’s.” Yet, same-store sales fell 2.9% at its flagship brand last quarter. Macy’s, like many retailers, said the balance of the year would be challenging. Among the reasons is the worry that the consumer appetite for purchases of any kind is shaky in a rough economic period.

The worst news Macy’s announced is that digital sales dropped 5% year over year in the most recent quarter. Digital sales remain the key to the future of retail, even for brick-and-mortar companies.


Another yardstick to measure the investment community’s opinions of Macy’s is the ratings of analysts. The Wall Street Journal shows that 17 analysts cover the company. Of these, eight rate the stock at Hold, which is a means by which analysts say they do not like the stock without a direct insult. One rates it at Underweight, and another rates it at Sell. Even Target, savaged by the markets, has analyst consensus numbers that are much better.

One final note is that Wall Street hates corporate jargon, which is part of the foundation of Macy’s current story. It calls its initiative or three-year plan “Polaris.” Every part of it is merely the common sense that applies to all retailers. Macy’s management should stop talking about the program and simply manage to do much better.

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