Macy's has had a terrible year.
After slumping nearly 50% in 2019, the company has shrunk to its smallest market cap in a decade. Its below $5 billion market value is roughly the same as IPO hotshot Beyond Meat, a company with 1% the annual sales. Macy's began the year with a market value closer to $10 billion.
It could be about to get much worse for the beaten-up retailer, says Craig Johnson, chief market technician at Piper Jaffray.
"I'd be selling this relief rally. Just based upon our technical work, the stock is in a very well-defined downtrend at this point in time and we're below a declining 200-day moving average. I see the best support on this stock actually coming in at $10," Johnson said Monday on CNBC's "Trading Nation."
A decline to $10 represents 35% downside from current levels. Shares gained Tuesday, a day after rising by $2 to $15.48 despite a downgrade to sell from Goldman Sachs. Analysts at the firm grew increasingly bearish on the health of Macy's retail operations.
Mark Tepper, president of Strategic Wealth Partners, is also steering clear of the department store chain.
"Macy's is a dinosaur. They don't have a competitive advantage. Mall traffic is in a structural decline. They have way too many stores, most of their stores aren't even in A-class malls," Tepper said during the same segment.
The balance sheet is also waving a red flag to Tepper.
"They've got too much debt, bad margins and that dividend … [is] just unsustainable," he said. "Within retail I think where you want to be is you want to stick with strong brands, you want to stick with-off price, not these old-school department stores."