Macy’s (NYSE:M) is being dropped from the S&P 500, and in a sign of how far the fortunes of retail have fallen, it is being banished all the way down to the small-cap S&P 600, skipping the mid-cap S&P 400.
It will likely not be the last company to suffer such humiliation amid coronavirus-related shutdowns.
Macy’s will be dropped from the S&P 500 on Friday to be replaced by Carrier Global, which is being spun out of United Technologies (NYSE:UTX) after United merges with Raytheon.
S&P’s decision to kick Macy’s out of the big-cap index is certainly understandable. Macy’s has dropped from a market capitalization of roughly $6 billion in mid-February to $1.5 billion today.
The problem is, Macy’s has plenty of company. Kohl’s, (NYSE:KSS) Nordstrom (NYSE:JWN), Gap (NYSE:GPS) and Hanesbrands (NYSE:HBI) all have market caps in the $2-billion range.
On Wednesday, Fitch Ratings droped its default rating for Macy's to BB+ from BBB-. The rating outlook is kept at Negative.
The ratings agency thinks Macy's has sufficient liquidity to manage operations through the expected downturn, noting it ended 2019 with $685 million of cash and recently tapped out its $1.5 billion unsecured revolver.
The company has approximately $530 million of debt maturing in January 2021 and $450 million maturing in January 2022, which Fitch expects it could pay down with the recent drawdown on the revolver.
M shares crept up seven cents, or 1.6%, to begin Thursday at $4.50
