4 companies trying to turn things around

When something goes wrong, it's tempting to think it can only get better. That's often the case for large companies, where investors may see a dinged-up stock as an opportunity to jump in for cheap.

But that idiom doesn't always play out. Sometimes bad situations just get worse. That's why large-capitalization "values" can be tricky for investors – the company's price looks attractive, but company-specific or industry-wide issues could keep the stock from ever bouncing back.

[See: 7 of the Best Stocks to Buy in 2017.]

Below are four large companies at such a crossroads. Analysts are trying to decide whether their fates will improve, but in some cases, it looks like bleaker days ahead.

Macy's remains stuck between Amazon and thrift. Macy's (ticker: M) started 2017 by announcing it would cut more than 10,000 employees – 3,900 cuts from store closures, and 6,200 cuts as a result of a corporate restructuring. Macy's also reported some coal in its stocking – a 2.1 percent decline in comparable-store sales for November and December.

The pain isn't new for Macy's, whose stock price has dropped nearly 60 percent since July 2015. The reason: off-price retailers such as TJX Companies (TJX) brands T.J.Maxx and Marshalls, and the growing clout of online retailers such as Amazon.com (AMZN).

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Retailers like T.J.Maxx and Marshalls sell similar products as Macy's, but undercut Macy's on price. Morningstar analyst Bridget Weishaar says Macy's is trying to match TJX by expanding its own off-price retail store, Backstage, which launched in fall 2015. The outlet offers clearance items from Macy's stores, but remains a small part of overall sales.

[See: 8 Gold ETFs to Buy Anytime.]

It's a similar story as it tries to fight e-commerce operators like Amazon. While Macy's has taken steps to improve its online efforts, such as offering in-store pickup of online purchases, it hasn't been nearly enough to stem the 5 percent drop in sales in the first three quarters of 2016.

Yes, Macy's 9.7 forward price-earnings ratio looks attractive compared to the overall Standard & Poor's 500 index's 17.5. But this might be just a value trap, as "the core business is in state of permanent decline," Weishaar says.

Hertz's troubles start with an ill-fated merger. You have to go back to 2012 to find the root cause of Hertz Global Holdings (HTZ) troubles. That's when it purchased Dollar Thrifty Automotive Group for $2.3 billion. Its stock price has fallen roughly 65 percent since it closed the deal.

The first hiccup came in 2013 when Hertz decided to move its headquarters to Estero, Florida. This led to the departure of many "mid-level revenue managers that didn't make the move," Deutsche Bank analyst Chris Woronka says. The loss of these managers has impacted Hertz's ability to correctly price rentals and maximize its fleet.

Another issue is Hertz's current fleet of vehicles. While Americans have moved toward SUVs and other premium large vehicles, much of Hertz's fleet was made up of smaller cars. It hasn't spent to reflect consumer tastes, while rival Avis Budget Group (CAR) has taken advantage of the trend, Woronka says. In response, Hertz's revenues have fallen 3 percent in the first three quarters of 2016, while Avis jumped 3 percent.

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J. Crew

The apparel retailer has had a difficult few years

J. Crew announced in November that sales at stores open at least a year dropped 8%, following a decrease of 11% in the same period last year.

Now, the company is attempting to change things up. In November, the retailer axed its popular bridal line. A month earlier, J. Crew launched an athleisure line with New Balance — a collection that Business Insider felt failed to live up to competitors' standards. 

Sears

Sears' sales continued to plunge in 2016. In the most recent quarter, revenue fell 13% to $5 billion, with losses widening to $748 million from $454 million in the third quarter last year.

The retailer is closing hundreds of stores, with more than 170 Sears and Kmart locations shuttering this year. 

And, things are only getting worse — many analysts say 2017 is likely the year that Sears goes bankrupt.

Macy's

In August, Macy's revealed plans to close down 100 stores in early 2017 as the retailer looks for a solution to slowing sales and the growth of online competitors. 

In November, the retailer reported that net income for the third quarter fell by 87% to $15 million, following a 46% decline over the same period last year. Same-store sales at stores open at least a year fell 3.3%.

"These figures show a company grappling with what looks like terminal decline," Neil Saunders, CEO of the consulting firm Conlumino, wrote in a note to clients.

Hugo Boss

Huge Boss simply isn't cool any more. 

In a UBS report released in Decemberonly 20% of people surveyed said that Hugo Boss was a cool and fashionable brand, compared to nearly 40% a year ago.

Being off-trend is seriously impacting sales. In November, the company adjusted its sales prediction for 2016, saying sales could decline up to 3% in the year. 

Coach

The handbag maker stopped selling merch at more than 250 department stores in 2016 in an effort to regain its premium, luxury status.

However, the move hasn't paid off yet — in November, when reporting the company's the most recent quarter, Coach said it had its slowest growth in four quarters.

Nasty Gal

A decade after it was founded by then 22-year-old Sophia Amoruso in 2006, Nasty Gal filed for bankruptcy in November. 

"Filing for bankruptcy is actually the most responsible decision for the business," Amoruso said at an event in Sydney, Australia when the news broke, the Independent reported.

The trendy fashion retailer had been through some tumultuous times in recent years. Amoruso stepped down as CEO in 2015. In her absence, the retailer laid off employees and former workers complained of a toxic environment.

It looks like Nasty Gal could get a fresh start in 2017. On Wednesday, British online fast-fashion retailer Boohoo.com announced it was bidding $20 million for Nasty Gal's brand and customer list. 

Lands' End

In December, Lands' End reported a 14.3% drop in same-store sales in the third quarter, with a 49% drop in apparel sales. That marked the ninth consecutive quarter of declining sales for the company. 

To make matters worse, Lands' End has also been dealing with problems in its executive suite.

In September, Federica Marchionni left her position as CEO. According to the Wall Street Journal, her departure was triggered by employees' disagreements with Marchionni's more high-fashion approach to the brand as well as the limited time she spent in the office — just one week every month. 

Aeropostale

As teens' interest in the brand waned, Aeropostale filed for Chapter 11 bankruptcy in May.

After declaring bankruptcy, the retailer announced it would close 154 stores in the US and Canada. 

"Back in the day, all of the cool kids had trendy brand names plastered across the front (or back) of their clothing. The trend has changed, and style today, perhaps encouraged by social media, embraces individualism and uniqueness," wrote Nicholas Rossolillo in finance publication The Motley Fool. "Online ordering and heavy discounting have also taken a toll on the industry, especially mall-based retailers. Aeropostale simply hasn't been able to adapt."

Kate Spade

Kate Spade's sales have suffered in 2016 as tourists' visits declined and discounting grew more popular, making it harder to sell items at full-price. 

Now, the company is reportedly working with investment banks on a possible sale, the Wall Street Journal reported Wednesday.

The news comes six weeks after New York-based hedge fund Caerus Investors sent a letter to Kate Spade pushing the retailer's board to consider a sale.

"We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.

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CEO John Tague stepped down in December amid Hertz's struggles, and was replaced by Kathryn Marinello. But activist investor Carl Icahn holds a massive 33.8 percent stake in Hertz and controls three board seats.

Hertz's issues require spending to fix, but Icahn-controlled companies aren't known for increasing spending to solve problems. "It's fair to say, they did not foresee the operational challenges lying ahead," Woronka says.

Chipotle tries to court customers again. Chipotle Mexican Grill's (CMG) stock has sickened investors ever since in the restaurant suffered a multi-state E. coli outbreak in late 2015. Its stock is off nearly 45 percent since October of that year.

But nearly a year since the problem was fixed, it's hard to tell how long the damage will linger. Through nine months of 2016, revenues had fallen 18 percent compared to the year prior.

"This has been something of a crucible for Chipotle," Bernstein analyst Sara Senatore says. She adds that it forced Chipotle to focus on some issues it had ignored.

In December, Chipotle dropped its co-chief structure, promoting founder Steve Ells to sole CEO. The restaurant chain also has focused on improving what may have lagged in quality.

"It always had some stores not up to best-in-class best practices," Senatore says. "It had so much demand, [it was] not as noticeable."

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But Chipotle's business remains a great draw. It increased its marketing spending from 2.4 percent of revenues in the third quarter of 2015 to 4.8 percent of revenues in the same quarter of 2016, to encourage customers to return.

Chipotle is in a good place to turn things around – it's just a matter of when. The 11 percent run since the start of 2017 is a promising start.

J.C. Penney's problems look familiar. Under previous leadership, J.C. Penney (JCP) tried to shift its focus away from bargains, but the strategy not only failed to attract new customers – it pushed away its base.

Now under CEO Marvin Ellison, it's going back to basics, returning its private brands that connect with customers, controlling costs, offering cheaper options and increasing its promotions. J.C. Penney's customers "tend to react to promotional activity," says Brian Nagel, an analyst at Oppenheimer.

But the turnaround is struggling. Comparable-store sales fell 0.8 percent in the holiday season, and its stock has traded roughly flat over the past three years. It's in the same sector as Macy's, and facing similar struggles.

[See: 7 Turnaround Stocks and How They're Doing.]

The large, mostly mall-based operator is in a "really tough spot," Nagel says.

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