24/7 Wall St. Insights

• Macy’s Inc. (NYSE: M) customers clearly have decided to shop elsewhere.
• Even with a smaller footprint, the retailer cannot turn itself around.
• Also: Dividend legends to hold forever.

Macy’s Inc. (NYSE: M), founded in 1858, is near the end of its long run as a major U.S. retailer. Its earnings show it won’t recover. The stock is down 28% this year, compared to an S&P 500 increase of 19%. It has tried to shrink itself to profits, and the formula is a failure.

Same-store sales are the best metric for the health of a retailer. Across its three brands, this dropped 4% year over year at its “owned basis” stores. At its flagship brand, the comparable drop was 4.4%. It expects the decreases to continue. Its financials are like a can of soup spilled on a floor.

Macy’s revenue declined from $5.1 billion to $4.9 billion. Net income was a tiny $150 million, which compares to a loss of $22 million in the year-ago quarter. All the numbers were worse than expected.

The grim results neglected to focus on the worst of Macy’s story. Earlier this year, Macy’s said it would close 150 stores. Like most retailers, it cannot cut its way to profits. Even with a smaller footprint, it cannot turn itself around. The company closed stores in 2022.

Macy’s store count no longer matters. It has become a dying retailer. Its customers have clearly decided to shop elsewhere. There is not a single sign it will recover.

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