What happened

Shares of Macy's (M -2.53%) fell 18.2% in September, according to data from S&P Global Market Intelligence, as steep second-quarter losses had investors worried it could eventually follow department store chain J.C. Penney into bankruptcy.

So what

Although the retailer's results were better than Wall Street expected, that only means Wall Street had set the bar exceptionally low -- because its performance wasn't all that exceptional. Sales were down 36% for the quarter to $3.56 billion on a 35% plunge in comparable-store sales. It lost $0.81 per share for the period.

Macy's Herald Square store

Image source: Macy's.

Considering analysts had forecast $3.5 billion in revenue and a loss of $1.77 per share, it looks good in comparison, particularly with digital sales up 53%, but compared to last year, which itself was dismal, it's not such a hopeful sign.

Now what

Macy's does see the writing on the wall for shopping malls, though, and recognizes if it remains put, the dwindling customer traffic they're registering will kill it off. 

The retailer plans to maintain its presence in top-tier shopping malls, but most future expansion will come from off-mall locations like strip malls or stand-alone stores. It will also experiment with more small-format stores.

Macy's carries a heavy debt load, likely experienced a tough back-to-school sales season, faces an even more competitive landscape as it transitions to more online sales, and fears the possibility a second wave of coronavirus outbreaks will tamp out any nascent retail recovery.

What Macy's does have going for it is expectations for a recovery, let alone its survival, are so low that any positive development could lead to a surge of enthusiasm. That seems like a big ask at this point, however, and investors shouldn't bet on it happening.