In this segment from MarketFoolery, host Chris Hill and senior analyst Matt Argersinger discuss the totally solid performance that department store chain Macy's (NYSE:M) turned in for its second quarter. Despite decent results, the stock dropped by a double-digit percentage.

Comparable-store sales are growing -- now -- but this is a business that still has a long way back to climb, in a tough environment for mall-based sellers, and its shares had already doubled over the past 12 months.

A full transcript follows the video.

This video was recorded on Aug. 15, 2018.

Chris Hill: We have to start with Macy's, though. Help me understand this, Matty. A good second quarter report. Profits and revenue, higher than expected. They raised guidance for the full fiscal year. Why is this stock getting punished today? It's down 13%.

Matt Argersinger: I think it's one of those situations where the stock has rebounded so much this year -- I forget what it's up by, I didn't look it up.

Hill: It's up about 80% -- even with the drop today -- in the past 12 months.

Argersinger: There you go. The stock has had such a nice run. It's been incredible. It's one of those situations where the stock got way ahead of the fundamentals. The report was good. You mentioned, they beat expectations on revenue and earnings, raised full-year guidance, that's great. Their comparable store sales, which is the key retail metric we like to focus on, growth there was expected to be between 2-2.5% this year. OK.

But you have to remember, here -- comps have been down three consecutive years for Macy's. In fact, cumulatively, they're down about 8%. Macy's is getting a fraction of those sales back. Meanwhile, they're still closing stores, mall traffic is still trending lower in most places. Even in their best locations, the unit economics just aren't that great for department stores right now. There's all that, too.

Hill: Two things on that. One, in terms of the same-store sales, I suppose we should all keep in mind -- and that's what we're seeing a little bit with the sell-off today -- when they're talking about their same-store sales growth being in the neighborhood of 2-3%, that also includes the holiday quarter. If you're baking in your holiday quarter and you're still only expecting 2-3%, that's not great.

The other thing is, on yesterday's show, Seth and I were talking about Home Depot and the quarter they just put up. We didn't hit this point specifically, but one of the metrics they broke out was their sales per square foot. Like pretty much everything else in Home Depot's quarter, it was up. That's the thing about Macy's that they've gotten away from. One of the areas that Macy's used to excel at was, they kept their overall store count relatively low compared to the profile of the brand. And, they did a better-than-average job on sales per square foot. They've really gotten away from that.

Argersinger: It doesn't feel like that premier anchor store that they used to be. They opened too many stores. We have too many malls in this country anyway, we know that. If you've held on to Macy's shares in the last few years, wow. Bless you, because you've been through some rough times and you've come all the way back from the brink. But I'd say, this year has been a bit of a gift, you might want to cash it in.

Chris Hill has no position in any of the stocks mentioned. Matthew Argersinger has no position in any of the stocks mentioned. The Motley Fool has the following options: short September 2018 $180 calls on HD and long January 2020 $110 calls on HD. The Motley Fool recommends HD. The Motley Fool has a disclosure policy.