Macy's (M -2.35%) stock lost about three-quarters of its value over the past five years as its comparable store sales growth slowed and its margins contracted. The department store chain's prospects briefly brightened last year as its comps growth turned positive again, but that streak abruptly ended last quarter as its total comps fell 3.5%.

For the full year, Macy's expects its total comps to decline 1%-1.5%, its revenue to slide 2%-2.5%, and its adjusted earnings to plunge 34%-39%. Those forecasts all missed expectations and indicated that Macy's would struggle during the holidays.

Macy's mainly blamed its troubles on sluggish mall traffic, weak international tourism, the late arrival of cold weather, and a disruption of its e-commerce website. It also mentioned the "competitive environment" during its conference call, but didn't name any competitors.

However, investors who follow the retail industry will likely notice that three retailers -- Amazon (AMZN -0.29%), The TJX Companies (TJX 0.32%), and Target (TGT 0.96%) -- are pulling shoppers away from Macy's.

A young woman holds shopping bags over her shoulder.

Image source: Getty Images.

Amazon has online perks Macy's has trouble countering

Amazon accounted for 49.1% of all U.S. e-commerce sales last year, according to eMarketer, while Macy's accounted for just 1.2% of all sales. Macy's is gradually expanding its digital ecosystem, but it admitted that its e-commerce sales decelerated last quarter.

Macy's is also expanding its loyalty programs. It hasn't disclosed its number of members, but it likely reaches fewer shoppers than Amazon Prime, which topped 100 million U.S. subscribers at the end of 2018, according to research firm CIRP.

Amazon constantly expands this ecosystem and locks in shoppers with new hardware devices and perks. Roughly 5% of U.S. shoppers are also doing most of their holiday shopping on Amazon's Prime Day in July instead of Black Friday, according to Decluttr.

These numbers indicate that Macy's is fighting a losing battle: Amazon's North American sales rose 24% annually to $42.6 billion last quarter, while Macy's total revenue slid 4% to $5.17 billion. Amazon also subsidizes the growth of its lower-margin marketplace business with its higher-margin AWS (Amazon Web Services) cloud unit, which generated 72% of its operating profits from just 13% of its revenue last quarter.

Macy's lacks meaningful ways to counter Amazon's Prime perks, its growing lineup of prisoner-taking hardware devices, or its AWS profit engine. Those soft spots could throttle Macy's growth for the foreseeable future.

The TJX Companies sales strategy is pulling away Macy's shoppers

One of the few retailers that sells products at lower prices than Amazon is The TJX Companies, the parent company of off-price retailers TJ Maxx, Marshalls, HomeGoods, HomeSense, and Sierra Trading Post. TJX accomplishes this by leveraging its scale to buy goods from over 21,000 vendors in more than 100 countries at clearance prices.

TJX rotates those products quickly through its brick-and-mortar stores, which promotes a shifting "treasure hunt" experience that encourages return visits. These strategies insulated it from the retail apocalypse, and its comps have risen annually for 23 straight years. It expects that streak to continue with 3% comps growth this year.

TJX also maintains steady margins as it consistently repurchases its shares, which feeds its stable earnings growth. That's why it expects its adjusted EPS to grow 7% this year.

TJX is also opening more stores as its struggling brick-and-mortar rivals shutter more locations, and its store count grew 5% annually to 4,519 stores last quarter. Macy's number of namesake and Bloomingdale's stores dipped 1% annually to about 680 locations last quarter, and it could shutter more stores if it fails to win back shoppers. Macy's is fighting back against TJX with Macy's Backstage and Bloomingdale's The Outlet, but neither banner is offsetting the declines at its core department stores.

A Target store.

Image source: Target.

Target's omnichannel strategy is showing the way to compete

Lastly, Target is reaping the rewards of a grueling multi-year expansion of its e-commerce and delivery ecosystem, which transformed most of its 1,862 stores into pick-up and fulfillment centers for online orders.

Target's digital comps surged 31% annually land accounted for 7.5% of its sales last quarter, and 80% of that growth came from its Order Pick Up, Drive Up, and Shipt same-day delivery services. The company also noted that its new loyalty program, Target Circle, was already "America's fastest-growing loyalty program" with over 35 million members.

Target also continues to renovate its brick-and-mortar stores, open new small-format locations for urban areas, and launch new private label brands. It increased its store count by nearly 1% over the past year as Macy's retreated.

Target has the confidence to keep expanding because its comps grew 4.5% last quarter on top of its 5.1% growth a year earlier. Target reported "broad market share gains" across all its merchandise categories last quarter, with apparel -- a sore spot for many other retailers -- leading the charge with 10% comps growth. For the full year, Target expects its comps to grow 4% and for its adjusted EPS to rise 15% -- and much of that growth could come at Macy's expense.

The bottom line

Macy's isn't doomed yet, but it's running out of time. It needs to find meaningful ways to counter Amazon, TJX, and Target before it gets permanently left behind in the smoldering fires of the retail apocalypse.