The risks are piling up for Macy's Inc  (M) - Get Report .

Analysts from Citigroup slashed their rating for the department store retailer to "sell" from "neutral" Monday, Oct. 30, citing mounting risks that could weigh on the ailing chain.

Shares of the Cincinnati-based company were lower 2.34% to $19.23 in mid-morning trading. With a new price target of $16, Citi analysts are predicting a 16.8% downside for shares from their Monday opening price over the next 12 months.

Macy's has "seen significant pressure on sales/margins for several years, they no longer make much money as a retailer, and [JC Penney Co. Inc.'s (JCP) - Get Report ] weak 3Q serves as a reminder of just how challenging the department store space is," Citi wrote.

And even the traditionally peak holiday season isn't going to be enough to reduce the long list of threats to Macy's, Citi added.

"In what is likely to be another promotional Holiday season, we don't believe Macy's has found the right tools to offset negative store traffic and margin pressures," analysts said.

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Comparable sales have been down 3% to 4% in each of the last two years. The figures are on track to be down about the same amount this year, Citi said.

As weak margins are paired with declining store traffic and an overall retail slump, Macy's shareholders could see their dividend cut back as the company pivots to focus on paying down debt.

"With management's focus on solidifying its balance sheet, we believe there is real risk that the dividend could be cut in the future in favor of paying down debt," Citi said.

Analysts said they see declining free cash flow over the next five years. Even though Macy's management has said it should have enough cash to pay a dividend, management has also indicated they "want balance sheet flexibility to get them through a downturn." Although Macy's waited to cut its dividend until the consumer weakened in the last market downturn, leaders might be more proactive this time around.

Since the start of the year, Macy's shares have fallen more than 46%.

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