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By Jason Stipp and Jeremy Glaser | 11-13-2015 11:00 AM

Friday Five: Retailer Stocks Ring Up Losses

Macy's, Nordstrom, and Priceline were under pressure this week, but are they bargains for investors? Plus, our read on retail sales, and more.

Jason Stipp: I'm Jason Stipp for Morningstar. Welcome to The Friday Five, Morningstar's take on five stories in the market this week.

Joining me with The Friday Five is Morningstar markets editor Jeremy Glaser. Jeremy, thanks for being here.

Jeremy Glaser: You're welcome, Jason.

Stipp: Lots of retail news this week. Let's start with Macy's. They were under some pressure after they released results this week. What's the story with the department store?

Glaser: We expected that Macy's was not going to have a great third quarter, but it was even worse than we expected and worse than the market expected. It also looks like their fourth quarter is going to be pretty weak as well. They have too much inventory. They haven't been able to get rid of it, and that probably means there's going to be some significant discounting going into the holiday season in order to move merchandise off the shelf. That doesn't bode well for profitability.

One of the other things I wanted to flag in the results is that Macy's did say they aren't going to spin off their real estate into a separate company, into a REIT, and try to maximize value that way. They are going to do a few things to get some of the real estate that's not being utilized at its fullest potential working a little bit better for them--but no big spin-off.

This comes on the heels of McDonald's making an announcement this week that they also aren't going to be pursuing a REIT. It seems like the strategy of spinning off real estate has fallen out of favor across the market. This had been a favorite of activist investors as a way to unlock value in a lot of these chains. However, given that the IRS may look at these transactions more skeptically, and management also wants to keep the flexibility of having the real estate, the tide seems to be turning against this strategy. It's an interesting trend that we saw this week, and I think we'll probably continue to see.

Stipp: Nordstrom also reported, and if expectations for Macy's weren't that high, they were certainly higher for Nordstrom, which had been doing pretty well. But they really disappointed this time around.

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