We believe Macy’s is struggling to stay relevant as consumers have many choices. The firm is in the process of closing about 150 of its lower-performing namesake stores as part of its Bold New Chapter plan. We think this downsizing is necessary as department stores have been losing market share to online stores and other retailers (outlets, branded stores, specialty stores, discounters) for at least 20 years. Macy’s strategy includes investments in continuing stores, smaller-format stores, cost reductions, supply chain investments, and luxury expansion. The firm is also building a media network to monetize its e-commerce traffic. Even so, due to store closures and a lack of consistent organic growth, we forecast that Macy’s revenue and operating margin will stay well below historical highs for the foreseeable future. We estimate its long-term operating margins at 4.5% on slightly negative annual revenue growth.