Macy's is spiraling

Standard & Poor's has downgraded Macy's credit rating to one notch above "junk" status.

The agency on Wednesday dropped Macy's rating from "BBB" to "BBB-," the lowest level of investment grade, citing poor sales and "unrelenting competition."

"The downgrade reflects our view of the company's weakened operating performance and competitive standing given the ongoing industry challenges, such as sustained low customer traffic, increased price transparency, and unrelenting competition from online, fast-fashion, and off-price retailers," S&P analyst Helena Song wrote.

In other words, Macy's is falling victim to fundamental changes in how Americans shop.

"We believe weak operating trends in the department store sector are a result of more than just cyclical headwinds, rather they are also a symptom of secular change in consumer spending habits," Song wrote.

The company's efforts to improve inventory management and cut costs won't be enough to offset prolonged pressures from slowing customer traffic and a highly promotional environment, she said.

Other analysts including Cowen & Co.'s Oliver Chen have also questioned Macy's ability to restore sales growth.

"Our view is that bigger picture strategic questions remain critical... as Macy's faces long-term pressure from the rise of off-price and Amazon, mall traffic declines particularly in lower productivity malls, and the supply chain revolution underway, and accelerated customer demand for speed," Chen wrote in a recent note.

Macy's this week reported a 4% decline in fourth-quarter sales to $8.52 billion. The company said same-store sales fell 2.1% for the quarter.

The company's stock has lost more than 20% of its value in the last year.