Gadfly's Banjo: No, Macy's Poor Earnings Don't Dictate Retail's Future

Macy's Inc (NYSE: M)'s stock plunged 17 percent on Thursday and hit a new multi-year low of $24.25. Investors and traders punished the stock after the department-store chain's earnings report contained many troubling metrics.

Investors and Wall Street will now debate Macy's suitability as an investment, but one aspect that shouldn't be up for discussion is the future of retail.

Taking Retail's Temperature

According to Gadfly's Shelly Banjo, Macy's woes aren't a sign of retails future since Macy's status as a retail proxy it held years ago no longer applies. Many years ago, Macy's was the only store where consumers could pick up a Coach Inc (NYSE: COH) handbag or Ralph Lauren Corp (NYSE: RL) jacket, but now consumers have more choices than ever.

The U.S. retail market is a $5 trillion industry, so why would anyone correlate Macy's $25 billion in annual sales as a proper gauge of the retail industry? Also, the retail market based on overall retail sales have been steadily growing since 2008.

Yet while overall sales are growing, department stores, specialty clothing stores, electronics and appliance stores, and office-supply stores are seeing shrinking sales. These types of stores are merely shedding market share to both online giants as well as off-price retailers.

In the meantime, chains like Macy's are still able to hang on for dear life and for at least the time being their "day of reckoning isn't here yet."

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Image Credit: By Miosotis Jade - Own work, CC BY-SA 4.0, via Wikimedia Commons