Dive Brief:

• With some sales pulled into the third quarter that normally take place in the fourth, Macy's on Thursday said that revenue in the period fell 23% to nearly $4 billion from $5.2 billion last year, as e-commerce grew 27% and store-based sales fell about 36%. All stores were open in the period, executives said Thursday.

• Gross margin fell 440 basis points from last year, but was up "significantly" from the previous quarter, thanks to inventory management, better merchandise sell-through and lower markdowns, according to a company presentation. Inventory was down 29% year over year.

• Store comps were down 20.2%, or 21% on an owned-only basis. The company swung to a $91 million net loss in the period, with an operating loss of $127 million compared to operating income last year of $52 million. The company's operating loss so far this year has reached $4.9 billion.

Dive Insight:

Macy's CEO Jeff Gennette, in a press release statement and on a conference call with analysts Thursday morning, deemed the department store's third quarter performance "solid," touting strong customer acquisition through e-commerce and off-price, and a swing to positive EBITDA a quarter earlier than expected.

The last accomplishment allowed the company to avoid drawing down its asset-backed facility, newly minted Chief Financial Officer Adrian Mitchell, a partner at Boston Consulting Group, said on the call.

Some analysts agreed with executives' characterization of the quarter. Macy's adjusted operating margin beat Telsey Advisory Group expectations. "The company experienced solid performance across each of its three banners (Macy's, Bloomingdale's, Bluemercury)," Dana Telsey said in emailed comments, noting that digital "remained strong" and that "key categories including home furnishings, jewelry and fragrance each generated a [double digit year-over-year] sales increase, helping to offset weakness in other categories."

"Solid," however, is not the word other analysts used. GlobalData Retail Managing Director Neil Saunders noted that the company's operating loss for the year stands out.

"We do not buy this narrative," Saunders said in emailed comments, noting that while sales did improve and Macy's "deserves some credit" for cost management and e-commerce growth, its digital strength pales against that of many rivals, its sales are "down by almost a quarter," and its operating loss suggests it's losing 3.2 cents on the dollar. "Against all these headline figures, to describe the results as anything other than 'meagre' is illusory," Saunders said.

While Gennette expressed confidence in Macy's e-commerce — saying that it has spurred customer acquisition, including of younger shoppers, and protected profitability — Saunders noted that Amazon, Target, Walmart, Best Buy, Ulta and Wayfair all have stronger pull online for various reasons, including product differentiation and strong private labels.

But the company's great weakness remains its stores, according to Saunders, a troublesome observation given that it runs nearly 550 namesake stores and more than 50 Bloomingdale's locations. In visits to several Macy's stores, GlobalData found dirty displays, frayed carpets, peeling walls, damaged displays, random bits of trash and garments on the floor for days. The situation is a reflection of some three decades of neglect that has also hurt many of the malls that Macy's anchors, according to Mark Cohen, director of retail studies at Columbia University's Graduate School of Business.

"Incompetence is not a word we use lightly," Saunders said. "However, it is patently evident across many of Macy's stores. In most of these, the shop floor is nothing short of a shambles — a messy jumble of product that is chucked on fixtures with no flair or care."