Macy's Inc M competes against "pitiful" J C Penney Company Inc JCP so its poor performance in the second quarter is either a function of poor execution or a loss of identity, according to Jim Cramer.
Macy's traded lower by 13.3% to $16.78 on Wednesday afternoon.
Cramer: Macy's Isn't In Trouble, Dividend Is Safe
Macy's second-quarter shortfall can be attributed in part to a strong U.S. dollar, which by default hurts tourist-related purchases at its flagship New York City store. Cramer isn't buying this excuse and said on "Squawk on the Street" there is more at play than foreign exchange related woes.
To suggest consumers simply aren't spending money these days is not true. The list of retailers that are doing just fine include names like Walmart Inc WMT and Target Corporation TGT, as well as off-price players, Cramer said.
"You are either online -- and Macy's got double digit [growth] online but nowhere near the ones I mentioned -- or you are off price," Cramer said. "And Macy's is not off-price."
By no means is Macy's in any sort of trouble, Cramer said. One of the top priorities under CEO Jeffrey Gennette was to pay down its debt and the dividend payout looks to be safe.
Gennette Defends Results: 'We Took Our Medicine'
Gennette told CNBC's Courtney Reagan the company's decision to lower its outlook for the year is a function of the customer showing "no appetite for price increases... right now." The company doesn't expect to pass on any cost to consumers from higher "tranche four" tariffs but if tariffs move to 25% "we have more work to do to figure that out."
"We took our medicine, we took almost a full point of margin with additional markdowns," the statement said.
Consumer Is 'Very Happy'
The average American consumer is "very happy" today and Macy's inability to target more consumers is a result of consumers "shopping elsewhere and for different type of goods," Former Toys 'R' Us CEO Gerald Storch told Fox Business News. A lone bright spot in Macy's print is a strong performance in online sales where revenue rose by a double digit year-over-year.
Meanwhile, hardline retailers are "booming" and Walmart's earnings report on Thursday is likely to paint a "very different picture of retail sales." Unfortunately for Macy's, the company is up against a shift in consumer spending away legacy from mall-based anchors. Across the U.S., there is likely two to three times as much retail square footage as is needed.
"The stores that are providing value to consumers are doing great," he said.
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