A Foolish Take: The Future Looks Murky for Department Store Chains

By Leo Sun Markets Fool.com

The past few years have been rough for department stores, which once enjoyed a steady flow of foot traffic as the anchors of sprawling malls. The rise of online shoppingcaused mall traffic to plummet, while "fast fashion" retailers like H&M lured away apparel shoppers.

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Department store chains like J.C. Penney (NYSE: JCP), Sears (NASDAQ: SHLD), Macy's (NYSE: M), Nordstrom (NYSE: JWN), and Dillard's (NYSE: DDS)reacted to that shift with store closings, discounts, and e-commerce investments. But based on their comparable-store sales growth in fiscal 2016, those efforts haven't stopped the bleeding.

Data sources: Annual reports. Chart by author.

Each of these companies has offered turnaround plans. J.C. Penney is sellingmore home improvement items, beauty products, andathletic apparel. Sears plans tocut over a billion dollars in expenses to stay afloat. Macy's is experimenting withstores within stores, private-label products, and more discounts. Nordstrom is expanding itsoff-price brands, and Dillard's isrelying on its relative strength in women's apparel.

Those plans haven't impressed investors. That's why all five stocks have posted double-digit declines over the past five years. Unless these companies dramatically pivot their businesses away from big brick-and-mortar stores and malls, that pain could continue for the foreseeable future.

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Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Nordstrom. The Motley Fool has a disclosure policy.