The Only Explanation Behind Macy's Bargain-Basement Valuation of 10 Times Earnings

Yahoo Finance · 2026-08-21

Amid a market where a vast majority of equities command uncomfortable valuations, department store operator Macy's trades at an unusually low multiple of under 10 times its trailing earnings per share of $2.42 and just over 10 times its forward earnings estimate of $2.33. This striking affordability naturally prompts curiosity, yet the rationale is rooted in persistent market pessimism regarding its long-term operational outlook. The phenomenon known as the retail apocalypse highlights how the relentless expansion of e-commerce has systematically eroded physical storefront revenues since the early 2000s. Department stores have shouldered a disproportionate share of this structural pressure, and Macy's has certainly not been immune. Consequently, the equity has suffered a steep 66% collapse from its peak in 2015, effectively erasing decades of gains to trade back at levels last seen during the late 1990s.

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Department store chain Macy's is showing extreme undervaluation, trading at less than 10 times earnings per share. This reflects concerns over structural revenue declines in traditional offline retail due to the growth of e-commerce. Despite the stock price dropping 66% from its 2015 peak, investors are already pricing in the possibility of further earnings deterioration.

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Retail — Due to the continuous growth of e-commerce and the retail apocalypse, offline department store Macy's faces concerns over declining sales and profitability, with the stock continuing a structural weakness such as falling 66% from its 2015 peak.

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The core reason for Macy's P/E ratio dropping to the 10x level is the structural decline of offline retail, often referred to as the retail apocalypse. As e-commerce expansion continuously erodes the sales of traditional department stores, investors are worried about future earnings deterioration.

In the bullish scenario, if profitability is defended through successful restructuring and cost-cutting, bargain hunting could flow in. In the bearish scenario, further declines are inevitable due to intensifying e-commerce competition. Investors should closely monitor future offline sales declines and digital transformation metrics.

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