Retail stocks, already under pressure, were crushed Wednesday after Macy's reported sales that were worse than feared and the company said it sees few signs of improvement.
The retail giant slashed its full-year forecast amid continuing weak apparel demand. Macy's CEO Terry Lundgren said in a statement he does not expect consumers to start spending more anytime soon.
Macy's is the latest retailer to report lousy earnings results. Gap's stock plunged as much as 15 percent Monday after the retailer reported yet another quarter where sales declined. L Brands, the maker of Victoria Secret, also missed expectations.
Macy's warning did not bode well for the retailer's rivals. Shares of Nordstrom, Kohl's, J.C. Penney and Dillard's, all posted big losses. Luxury retailers Michael Kors and Ralph Lauren also traded lower.
Amazon.com was one of the only retailers that was higher. The online retailer's success highlights the struggle for brick and mortar retailers, many of which are viewed as having too many stores.
The SPDR S&P Retail ETF (XRT) traded more than 4 percent lower, its worst day since November 2011.
The sell-off hit stocks that have been this year's retail winners. Discount retailers such as Five Below, Big Lots, Dollar General traded to the downside. Those names have all made double-digit gains so far this year. Target and T.J. Maxx were also lower, but are still about 5 percent higher so far in 2016.
Cowen & Co. retail analyst Oliver Chen said Wednesday it's a very dramatic time in retail. "We think the off-price sector is benefiting from share gains at the expense of full-price," he said on CNBC's "Squawk on the Street."
The declines followed last week's retail sector slump on the heels of weak April sales results.
But this quarter's retail story isn't over yet. Investors will be waiting on Nordstrom earnings, due after the close Thursday, and April retail sales data, expected Friday morning. Ralph Lauren, J.C. Penney and Kohl's are also reporting this week, followed by Sears, Target and Wal-Mart next week.