CEO thinks momentum is on Macy’s side
Macy’s CEO Jeff Gennette was feeling good yesterday on the department store retailer’s earnings call after the company posted its first quarterly same-store sales gain in three years.
“We’ve created momentum and we are taking that momentum into the new year with a commitment to returning Macy’s, Inc. to comparable sales growth in 2018,” said Mr. Gennette (via Seeking Alpha). “We’re headed into 2018 with an improved base business, healthy inventories, a focused and engaged organization and a clear path to return Macy’s to growth.”
Macy’s comps improved 1.4 percent during the fourth quarter as the company benefited from improvements in its beauty business, which meant it did not have to engage in “additional discounting to clear inventory.” Mr. Gennette said he expects 2018 to be a good year for the category as Macy’s transitions from its traditional approach, where associates were trained to understand a specific brand line, to one where they are cross-trained to advise customers across a broad array of products.
Mr. Gennette said Macy’s saw improvements in its stores and that its online business continues to grow at a double-digit pace.
While it has fewer stores than it did at this point last year, Macy’s plans to increase its capital expenditures by $150 million in 2018. “Healthy stores mean a healthy business,” he said.
A large portion of the expenditures are being devoted to stores that are part of Macy’s “Growth 50” initiative, which will see the company roll out concepts tested at the chain’s store in Woodbridge, NJ last year to 50 new locations. The stores will feature more fashion, localized product selection and leased businesses including food and beverage. The stores will also include expanded Backstage shops.
“We’re improving fixtures and facilities. We’re expanding in-store technology. We’re developing top talent. We’re also ramping up local marketing and community engagement,” said Mr. Gennette. “We plan to come out of 2018 with these 50 stores on an accelerated growth track and with the model to scale more broadly across our stores’ portfolio in 2019.”
The retailer recently debuted The Market @ Macy’s, a turnkey in-store pop-up concept, being tested at 10 stores in Boston, Detroit, Fort Lauderdale, New York, Las Vegas, Los Angeles, Pittsburgh, San Antonio, San Francisco and Seattle.
- Macy’s (M) Q4 2017 Results – Earnings Call Transcript – Seeking Alpha
- Macy’s Snaps Losing Streak with First Sales Increase in 3 Years – Fortune
- Macy’s launches in-store pop-up concept for brands – RetailWire
- Is Macy’s heading for a rebound? – RetailWire
DISCUSSION QUESTIONS: Where do you see the biggest opportunities for Macy’s to improve its business? How will increased capital expenditures and Macy’s “Growth 50” plan affect the business overall?