Investors who have owned stocks since 2016 generally have experienced some big gains. In fact, the SPDR S&P 500 (NYSE: SPY) total return in the past five years is 123.8%. But there is no question some big-name stocks performed better than others along the way.
Macy’s Struggles: One company that has been a horrible investment in the past five years is department store retailer Macy’s Inc (NYSE: M).
Macy’s is one of countless brick-and-mortar retailers that have been crushed by Amazon.com, Inc. (NASDAQ: AMZN) and other online retailers in recent years. Unfortunately for Macy’s investors, the company’s strategy of trying to shrink its way to success has had little success up to this point.
From 2010 to 2015, Macy’s closed 52 stores and opened just 12. In August 2016, Macy’s announced it would be closing 100 stores as their leases expired. In February 2020, Macy’s said it will be closing 125 stores and cutting about 2,000 jobs over the next three years.
Macy’s investors have been treated to more of the same so far in 2021. In January, Macy’s announced another 30 store closures, setting the company up to monetize another chunk of real estate. This strategy may help shore up the company’s balance sheet and boost its same-store sales numbers in the near-term, but Macy’s stock price suggests investors are very skeptical of the longer-term outlook.
At the beginning of 2016, Macy’s shares were trading at around $34.50. Macy’s rallied as high as $45.50 in early 2016. Unfortunately, that would mark the stock’s high point of the past five years as Macy’s investors were forced to watch the broad market rally from the sidelines.
The stock broke down to as low as $17.41 in late 2017 before rebounding as high as $41.99 in mid-2018. The stock was back below $15 by late 2019, and things only got worse from there when the pandemic hit.
Macy’s In 2021, Beyond: Mall retailers were among the hardest hit in 2020 due to shutdowns and social distancing. Macy’s shares dropped as low as $4.38 in March 2020 before rebounding to as high as $22.30 in early 2021. Since then, the stock has once again pulled back to around $15.50.
Macy’s investors who bought five years ago and held on have taken a big hit during one of the hottest market periods in recent history. In fact, $1,000 in Macy’s stock bought in 2016 would be worth about $490 today, assuming reinvested dividends.
Looking ahead, analysts are expecting more pain ahead for Macy’s in the next 12 months. The average price target among the 12 analysts covering the stock is $10, suggesting 35.3% downside from current levels.
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