What happened

Shares of Macy's, Inc. (NYSE:M) were heading lower today on a broader sell-off among retail stocks. 

While there was no direct news on Macy's, department store stocks sold off after Nordstrom Inc's (NYSE:JWN) attempt to go private appeared to hit a roadblock. 

As of 11:43 a.m. EDT, Macy's shares were down 5%, while Nordstrom, J.C. Penney (NYSE:JCP), and Dillard's (NYSE:DDS) were also down sharply.

The exterior of Macy's flagship store in Manhattan

Image source: Macy's.

So what

The Nordstrom family has been seeking partners to take their namesake company private for several months, but The New York Post reported last night that the talks were "faltering." The Nordstrom family had worked with Leonard Green & Partners and other private equity firms, but the financing has not materialized and the deal appears to be "deep trouble." 

That news cast a pall on Macy's and its peers as it could indicate lackluster interest in the department store sector as a whole.

Separately, another report showed that mall vacancies increased 8.3% in the third quarter and construction activity on shopping centers fell 49%, another sign that declining mall traffic is only going to get worse.

Now what 

Macy's shares approached a 52-week low on the news as the company continues to struggle with the shifting dynamics in the retail industry. The company has modified its strategy by acquiring beauty brand BlueMercury, opening off-price Backstage stores, and selling off valuable downtown real estate, but none of those initiatives have reversed falling sales or inspired confidence among investors.

After today's news, that trend seems likely to continue.

Jeremy Bowman owns shares of J.C. Penney. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.