Macy's is spiraling
Thomson Reuters
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.
Markets Insider
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market