Macy’s Shares Gutted by More Bad Retail News, Fear It Cannot Survive

By Douglas A. McIntyre Updated Jan 12, 10:17AM EST · Published Jul 11, 6:25AM EDT

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Macy’s Shares Gutted by More Bad Retail News, Fear It Cannot Survive — © Wikimedia Commons

Amazon.com Inc.’s (NASDAQ: AMZN) plan to compete with Best Buy Co. Inc.’s (NYSE: BBY) Geek Squad sent the brick-and-mortar retailer’s shares down 6.2%. Gap Inc.’s (NYSE: GPS) share dropped 6.3% as a deal to buy Abercrombie & Fitch Co. (NYSE: ANF), a rival, fell through. However, of all the retailer shares that dropped yesterday, deeply troubled Macy’s Inc. (NYSE: M) fell the most, by 7.1%, a sign of how fragile Wall Street thinks the company is, and raising questions about its possibly terrible future.

At $21.08 a share, Macy’s trades at the bottom of its 52-week price range of $45.41 to $21.07. One reason its shares may have dropped so much is that Amazon has started its Prime Day, an annual day of sharp discounts and special deals for its Prime members who pay $99 a year for free shipping and streaming media, among other things. Many analysts believe the event sucks sales away from other retailers, although that is only a theory.

The drop in Macy’s shares shows that almost any bad news about retail, even if it does not much affect the company directly, can send investors fleeing. Macy’s will cut the price of cosmetics, according to The Wall Street Journal, which is hardly enough to shave half a billion off its market cap. Rather, the deeply held belief that Macy’s cannot survive continued retreats in store counts and price now drive investor action.

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Macy’s balances precariously on the edge of whether it is the next Sears Holdings Corp. (NASDAQ: SHLD) or a store that might survive if it can “downsize” enough. The downsizing strategy would leave it with a small national footprint to support what is still a widely known brand. It would also mean that the infrastructure of high management costs and distribution channels would have to be dismantled. Its price leverage with suppliers would also be hurt.

All the recent news about large retail companies, whether or not they compete with Macy’s, is a reminder that the aged retailer has not found a way to reinvent itself, and may not be able to.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.