Macy's is known for having everything that a shopper could possibly need. And while that might be true, Jim Cramer wondered if maybe it has too much of everything, and nothing we need.
"I see a microcosm of pretty much everything I don't like about traditional bricks-and-mortar retail, even as I think the stock's dirt cheap and trying to stabilize," the "Mad Money" host said. (Tweet This)
Macy's reported its second-quarter earnings on Wednesday, and the stock plummeted more than 5 percent in a single session as an aftershock to its major miss from analyst expectations.
When Cramer went down the list of what went wrong with the company, he found himself realizing that there are some major structural problems with Macy's. In general, it just has too much of everything! It was clear to Cramer that there is too much apparel, too many accessories and too much real estate.
The one thing that it has too little of? Bargains.
After the Great Recession, frugal shoppers now frequent the off-priced outlets for their shopping needs. Cramer was reminded of this recently when his daughter moved and instead of taking the obligatory trip to Macy's for her furniture; she told him she had already purchased her furniture from Wayfair.com.
"But a lot of what Macy's just said reminds me of how hard it is right now to be in bricks-and-mortar retail," Cramer said.
CEO Terry Lundgren cited headwinds such as fewer tourism visits due to the strength of the U.S. dollar—a problem that online retailers do not face. Additionally, Macy's is expanding into Puerto Rico at a time when the island faces many economic challenges.
"I mean, Puerto Rico is defaulting on its bonds, for heaven's sake, and Macy's is opening a second store there? What's wrong with this picture?" Cramer asked.
But in the end, the biggest issue that Macy's has, in Cramer's opinion, is its Web presence. The company is always talking about its omnichannel business, yet, it once again admitted that it had a steeper-than-expected learning curve. Then again, every retailer is on a learning curve if it is going to try to compete with Amazon.
So, while Cramer knows that Macy's will see its way through these problems, it does prompt him to question whether the bricks-and-mortar retailers are fit for investing. Even for a renewed-activism trade like Macy's.
"The challenges of the modern day, full-price retailer are so stiff that you have to wonder whether it's even worth it, given that there are so many better places to invest your money," Cramer said. (Tweet This)