Executives at both Macy’s and Nordstrom’s profess to be mystified by the sharp downturn in business since July. The CEO of the former, thinking positively, promised some big surprises in the way the upscale chain meets the problem. We should wish him good luck, since he’ll be dealing with nothing less than the slow asphyxiation of brick-and-mortar retail in this country. He’s right in pointing out that many pessimists have been sounding the death knell for department stores for many years. But just because a few upscale chains have survived Amazon thus far hardly guarantees that they’ll be around in another ten years. It’ll be too bad, because Nordstrom’s in particular seems to be doing everything right. Whenever I’ve bought something from the local store, I’ve always been impressed with how hard they try. Their policy on returns is extremely generous, their sales people are knowledgeable, polite and well groomed, and the merchandise is high-quality and fashionable. Despite this, the store seems empty most of the time. Macy’s is the more aggressive marketer of the two, but like Nordstrom’s, they are having serious problems attracting a younger generation of shoppers who seem to prefer cut-rate merchandise and outlet stores over full-service retailers.
The respective stocks of the two companies have taken quite a beating this year. Nordstrom’s shares fell 23% last week alone, from 65.80 to 50.43, and are down 35% from March’s multiyear high at 73.81. Macy’s stock has fared even worse, falling 47% since July, when it capped a seven-year run-up at 73.61. It was trading for 29.10 at the final bell on Friday. This left it just a hair above a key Hidden Pivot support at 38.66, but if that number were to give way, I’d infer the stock was on its way down to 31.80, or even 25.12. As for Nordstrom’s, which settled at 53.96, it could grope its way all the way down to 32.43 before picking up good chart support — in this case, a key low there recorded in August 2011. ________ UPDATE (November 22, 11:29 p.m.): After slipping a bit below 38.66, Macy’s shares have picked up support. If it turns out to have been a consolidation, I doubt the stock will get very far.