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Thunder clouds for department stores

It's only the beginning of November, but some ominous indicators are surfacing for department stores as they head into their most important shopping season.

Citi Research on Monday downgraded Macy's and J.C. Penney from neutral ratings to sell, CNBC reported. Last week, Penney slashed its 2017 profit and same-store sales forecasts, citing heavy discounting, primarily across apparel, to get rid of excess inventory ahead of the holidays.

In the current retail environment, we believe department stores are structurally disadvantaged to win," Citi analyst Paul Lejuez wrote in a note to his client, according to the report. "Risks continue to mount."

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