Please ensure Javascript is enabled for purposes of website accessibility

Why Macy's Stock Dropped 10% Last Month

By Jeremy Bowman - May 4, 2016 at 9:13AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of the department store chain continued to struggle on industry concerns and falling sales.

What: Shares of Macy's (M -4.06%) tracked with a downward trend in the department-store industry last month, falling 10% according to data from S&P Global Market Intelligence on persistent negativity and demands from activists to explore a REIT conversion. As the chart below shows, the bulk of the stock's drop came in the beginning of the month.

M Chart

M data by YCharts

So what: The venerable department-store chain may still be reeling from a weak holiday-quarter earnings report, as same-store sales plummeted during the key holiday period. 

In response to demands from activist investors, Macy's hired an executive vice president for real estate, Doug Sesler, who will work on joint ventures and other partnerships to unlock value from the company's real estate. The company recently sold the top floors of its Brooklyn location for $270 million.

Rivals including Nordstrom and J.C. Penney also fell by double digits last month as department-store chain continue to deal with challenges including e-commerce and an excess of retail space.

Now what: Macy's stock may continue to languish until the company changes the narrative, which is currently a business in retreat. The retailer will report earnings later this month, with analysts are expecting another ugly report with earnings per share down from $0.56 to $0.38 and revenue down 4%. With the bar set so low, Macy's may be able to top expectations -- but without a savvy real estate strategy or the ability to grow sales and profits, one shouldn't expect a turnaround soon.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Macy's, Inc. Stock Quote
Macy's, Inc.
$19.38 (-4.06%) $0.82
J. C. Penney Company, Inc. Stock Quote
J. C. Penney Company, Inc.
Nordstrom, Inc. Stock Quote
Nordstrom, Inc.
$23.27 (-5.75%) $-1.42

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/29/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.