What happened

Shares of Macy's (M 0.44%) dropped 22% in the first half of 2023 according to data provided by S&P Global Market Intelligence. The department store chain continues to experience retail woes, and it slashed its full-year guidance after the first-quarter report.

So what

This is only the latest chapter in the ongoing saga of Macy's. The entire department store and mall strategy that was a staple in the 1980s and 1990s has been on the decline for years, and many stalwarts from that generation are limping along as they take various measures to recapture their glory years.

Macy's has succeeded to some degree with a variety of amelioratory actions. These include closing some stores, experimenting with new store sizes, adding brand stores-within-a-store, beefing up its digital chops, and several more. But these all still feel like bandages on a wound that just isn't healing.

The retailer hasn't been helped by the pandemic, supply chain problems last year, and inflation this year. It's making a valiant effort to stay alive despite internal and external headwinds, but it keeps getting knocked down.

In the 2023 first quarter (ended April 29), sales fell 7% from last year, and earnings per share (EPS) dropped from $0.98 to $0.56. Some positive news was that its actions to become more efficient showed results, and gross margin improved from 39.6% last year to 40%. It's also expecting $200 million in cost savings for the year.

The most disappointing part of the report was that the retail scene is doing even worse than expected, and management revised its full-year outlook. It's now guiding for sales of $22.8 billion to $23.2 billion, down from the previous outlook of $23.7 billion to $24.2 billion, with a year-over-year comparable-store sales decrease of 6% to 7.5%, down from the previous estimate of a 2% to 4% drop. EPS is now expected to be $2.70 to $3.20 instead of $3.67 to $4.11.

Now what

Macy's is dealing with a host of issues, and only a true risk taker would be interested in buying its stock right now. It has excellent management and is dealing with its problems the right way, but its model just isn't relevant in today's retail climate. 

That doesn't mean it's done for. It's a multibillion-dollar company that's profitable, and that's something. It's financially healthy and pays a dividend that yields 4% at the current low price.

But this isn't a company that's moving up, and investors will find better growth opportunities in other stocks.