Department Stores: A Hopeless Retail Cause?

On this week’s episode of Shopping for Stocks, host and Zacks Editor Maddy Johnson dives into one of the scariest aspects of the retail industry: department stores.

Yesterday, Citi Research downgraded Macy’s (NYSE:M) and JCPenney (NYSE:JCP) to “Sell” from “Neutral,” alluding to a less-than-positive holiday season for retailers in the struggling department store space.

Analyst Paul Lejuez said that Macy’s in particular “no longer makes much money as a retailer,” and “has [not] found the right tools” to evade a steady decline. JCPenney’s rating was cut on the heels of weak updated guidance, while the company blamed heavy discounting ahead of the holiday shopping period.

As a result, a domino effect occurred, sending shares of Nordstrom (NYSE:JWN) , Kohl’s (NYSE:KSS) , and Dillard’s (NYSE:DSS) downwards. Even retail sector ETFs like the SPDR S&P Retail (MX:XRT) ETF XRT and the VanEck Vectors Retail ETF (V:RTH) were down.

But this impact is nothing new, and it’s time these department stores break this vicious cycle.

How can companies like Macy’s stand out from its peers? What can it do differently? And most importantly, how can it make shopping an event again?

With Nordstrom and even Sears implementing innovative strategies, stores like Macy’s and JCPenney must try something to stay in the game.

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Thanks for listening to this week’s episode of Shopping for Stocks!

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