(Bloomberg) -- This isn’t the year that Macy’s Inc. had in mind.

In early February, the retailer seen as America’s flagship department store was announcing its big turnaround plans. Only two months later, it finds itself booted off the S&P 500 with its stock at a record low and its credit rating cut to junk by Fitch.

With all of its 775 stores closed for an uncertain period of time, the 162-year-old retailer has furloughed the majority of its 123,000 workers and is drawing down its line of credit while deferring capital spending. It’s also extending payment terms and evaluating financing options. Chief Executive Officer Jeff Gennette is forgoing a cash salary.

In spite of the rise of e-commerce and online giants like Amazon.com Inc., Macy’s remains a big player. While department stores’ relevance has faded in recent years, Macy’s flagship location has remained an essential part of the New York City experience for millions of tourists. The company has posted annual sales of $25 billion or more for a decade running.

Now, with shoppers’ migration online turbocharged by Covid-19 and their spending shifting to nondiscretionary goods practically overnight, Macy’s is facing a full-scale crisis.

‘New Ballgame’

“It’s a whole new ballgame at this point,” said Gabriella Santaniello, founder of retail consulting firm at A Line Partners. “I feel for them because they started to lay out this plan with what they’re trying to do in the future, and this is just a punch in the gut.”

Macy’s restructuring plans laid out earlier this year include closing about a quarter of its stores over the next three years and cutting 2,000 jobs. It consolidated its long-held corporate headquarters in Cincinnati to New York, and said it was moving forward with a plan to build a commercial skyscraper atop its massive Herald Square location.

The company is now more concerned with maintaining its day-to-day liquidity.

“Having lost the majority of our sales with the store closures, we must take unusual measures to conserve cash throughout this crisis,” Gennette said in a memo to employees in late March.

Macy’s didn’t respond to requests for comment.

Anchor Tenant

The company is a major anchor tenant that is often used as a barometer for the health of malls, and in turn, the rest of retail. It operates 120 million square feet of retail space, which has now entirely gone dark. For comparison, its closest rivals on this metric are Kohl’s Corp., which has 82 million square feet, and J.C. Penney Co., which has 94 million square feet.

Macy’s, of course, isn’t alone among retailers that reeling from the rapid shock of coronavirus. Mall-based stores have also shut down and are furloughing workers, as have Kohl’s and J.C. Penney. Both companies last month shelved plans to present revitalization strategies to investors.

But Macy’s struggles are a clear sign that the entire segment is on the edge. In addition to the sudden loss of all store revenue, the company said in a regulatory filing this week that it anticipates the receipt of new products and raw materials will be “slowed or disrupted” in the coming months, both for its own private-label goods and merchandise from suppliers.

“Out of all of retail, department stores are the most at risk sector during this crisis,” Neil Saunders, managing director of GlobalData Retail, said. That’s because of their high operating costs, shuttered locations and nonessential product assortment.

‘Big Structural Problems’

“On top of all of this, most players in the segment had big structural problems long before this event hit them. That puts them in an incredibly weak position,” he said.

Fitch Ratings sees retail disruption persisting until the end of 2021, but the credit-rating company predicts Macy’s and peers like Kohl’s and Nordstrom Inc. will have enough liquidity to survive. Plans like store remodels will probably need to be put on hold, however.

“When you talk about managing liquidity through the downturn it’s really talking about levers you can pull to manage your expenses as revenue is on a decline,” said Monica Aggarwal, a retail analyst at Fitch.

Macy’s, Kohl’s and Nordstrom have enough cash to invest in e-commerce, she said. “They should be able to stabilize, if not grow their share longer term.”

©2020 Bloomberg L.P.