Macy’s Inc. (NYSE: M) announced difficult results, and even more troubling numbers for the near future. The stock rose, perhaps because the cost cuts could temporarily help the bottom line. However, shares are down 31% over the past year. The sales trend probably will be flat to down in future quarters.

Macy’s will close 125 stores and cut 2,000 people. Retail stock analysts remain worried. Among the 16 analysts who cover the company according to The Wall Street Journal, eight rate the stock as a Hold and five as a Sell. Their median price target is $16, below the current price of $17.45 a share.

The worry about Macy’s is that, even with cost cuts, its top line will still drop over the next several years, along with same-store sales. The point was made that Macy’s cut unprofitable stores and kept those that make money. An overall sales drop will cut into the performance of those better stores. Bloomberg pointed out, “But it’s not clear that even this latest overhaul — which also includes enhancing Macy’s loyalty program and staying focused on digital — will be enough to contend with Amazon, which goes from strength to strength.” Amazon is blamed for the collapse in brick-and-mortar retailers, particularly department stores. The argument has the benefit of accuracy.

Macy’s other problem is the risk that not many brick-and-mortar companies can stay alive. Target has had some success so far. So has Macy’s rival Nordstrom. As the physical store battle gets more desperate, the winners will be those who do best as they fight for market share. In addition, the pie will not get bigger. It will shrink.

The test of Macy’s will be its quarterly earnings for the first half of the year. Any major declines will be a sign that plans to improve its situation have faltered.

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