Macy's (NYSE:M) shares fell 60% in the first six months of the year, according to data from S&P Global Market Intelligence, as the company was hit hard by the coronavirus pandemic. The department store chain was forced to sharply cut back on expenses, take on more debt, and pause its turnaround as stores closed for several weeks. Looting at several of its stores also added to the company's challenges.
As you can see from the chart below, the stock tumbled when the pandemic started -- and it has not yet recovered.
With a heavy real estate footprint and a business largely dependent on apparel sales, which come with a distinct set of challenges during the lockdown, Macy's is struggling to manage its way through the crisis.
The year started off uneventfully as the company announced a three-year turnaround plan in February, but the stock fell sharply as the coronavirus threat hit the market. By mid-March the company had closed all of its stores, accessed a $1.5 billion credit facility, suspended its dividend, and cut non-essential operating costs. The company acknowledged that the pandemic was taking a "heavy toll" and it took a number of steps to shore up its financial position, including furloughing store-level workers to survive the crisis.
By June, the company had raised $4.5 billion, including $1.3 billion in debt at an 8.375% interest rate, a steep price to help it stay solvent. Its first quarter earnings report was delayed until July, and the numbers were ugly. Revenue fell nearly 50%, and Macy's posted an adjusted net loss of $638 million. It also took a goodwill impairment charge of $3.1 billion. The company also said it would lay off 3,900 corporate and management staff.
There was some good news, however. Management said that sales at reopened stores have been stronger than expected, and that it expects to exit the second quarter in a clean inventory position. The business appears to be steadily improving, but with a resurgence of coronavirus cases, the company's recovery may be put on hold.