Macy's downgraded to junk status

S&P Global Ratings has downgraded Macy's to junk status saying the department store is falling on the wrong side of the change in consumer preferences. The news was reported by Bloomberg.

S&P lowered Macy's credit rating from BB+ to BBB- due to Macy's excess stores. Macy's shares were down yesterday by 4 percent upon S&P's announcement.

S&P says that Macy's will have a hard time accomplishing its turnaround plan as it focuses on e-commerce, loyalty programs, and private labels as many of their competitors are already ahead of them in these areas making it hard for the department store chain to compete. Macy's three-year turnaround plan includes closing 125 stores and eliminating 2000 jobs.

Macy's is hoping this turnaround plan will save them 1.5 billion dollars by 2022. Like many department store chains in 2020, Macy's is struggling as consumers shopping habits change, and now they are playing catch up. As customers are shopping less at malls, the department stores which anchor these malls take a hit. It will be a while before the long-term effects of Macy's turnaround will either see fruition or call for more restructuring.