By most measures, Macy's (M -1.53%) second quarter was a solid win. Revenue of $5.65 billion was up nearly 60% year-over-year, and the bottom line swung from a loss of $1.39 per share a year ago to a profit of $1.08 per share for the three-month stretch ending in July. Sure, the comparisons were to a COVID-crimped quarter, but Q2's results were still better than the $5.01 billion worth of sales and earnings of only around $0.14 per share analysts were collectively expecting. The department store chain even upped its full-year sales and profit guidance and reinstated its dividend, fanning the bullish flames that have driven the stock up 27% since last week's release of last quarter's results.

However, if you think this company's beginning a recovery that's too good for investors to pass up, you may want to take a step back and look at the bigger picture.

Bigger-picture problems

Macy's isn't necessarily doomed. Last quarter was a better-than-expected one, at least partially because the company is positioning itself smartly for the post-pandemic norm. Using its stores to fulfill online orders, for instance, speeds up delivery times and efficiently take some of the burden off warehouses dedicated to online shopping. In the meantime, the retailer also drew a sizable crowd back to its stores last quarter despite the lingering pandemic.

Be wary of jumping to bullish conclusions based on last quarter's numbers and raised guidance, though, for a couple of reasons.

Image source: Getty Images.

The first is that Macy's is coming out of the worst of the pandemic shutdown with a heck of a lot less competition than it was facing when it went into it. CoStar Group estimates around 12,000 U.S. storefronts were permanently shuttered in 2020, up from 2019's count of 10,000. Coresight Research believes retailers could close as many as 10,000 more stores this year as well, up from its 2020 estimate of nearly 9,000 store closures.

The short-run upside is clear: Fewer competitors means more business can be won by Macy's, particularly on the apparel front. To the extent this year's anticipated 37% sales growth is only the result of competitor attrition, however, Macy's growth could come to a screeching halt, and sooner than one might anticipate. To that end, analysts don't expect to see any sales growth next fiscal year, or the year after that. Earnings are apt to flatten out as well. That's telling.

Data source: Thomson Reuters. Chart by author.

There's good reason for such pessimism. The department store business as a whole has been steadily deteriorating since 2000 -- the second reason Macy's is a tough name for most investors to step into here.

Data from the Census Bureau tells the tale. This year's incredible department store spending only looks like snapback spending after months of lockdowns.

Data by YCharts.

Yes, blame Amazon (AMZN -2.09%) and all the other online shopping it inspired. Digital Commerce 360 reports 46% of last year's apparel sales to U.S. consumers were made online. Last year's temporary circumstances only served to accelerate a more permanent shift, however. The consumer research outfit points out that 2019's online share of the nation's clothing sales was 30%, up from 2018's 26%, extending a well-established trend.

Macy's offers online shopping, to be sure, but it's never been -- and still isn't -- a serious threat to the more prominent players of this fast-growing arena. More to the point, the company has yet to explain what it's going to do that will directly combat the headwind that was blowing well before COVID-19 took hold. In the meantime, you have to presume that at least a fair number of whatever store closures are still in the cards will claim at least a few more Macy's stores.

Keep shopping

An impossible situation? No, the world's always apt to support a minimum number of brick-and-mortar shopping options. There's no reason to think Macy's can't be one of the industry's survivors.

However, mere survival within a shrinking industry isn't an especially thrilling basis for an investment, and competitor attrition isn't exactly an ideal growth driver, either. Given how many other higher-odds, higher-growth options are out there, this is one you can pass up -- at least until there's more certainty regarding its future growth.