Is Macy’s heading for a rebound?
Macy’s outgoing executive chairman and former CEO Terry Lundgren thinks the department store operator is on the cusp of a rebound even if others still see the company as lagging behind rival retailers.
No doubt, Mr. Lundgren and other Macy’s stakeholders were pleased that the retailer finished the holiday season with same-store sales up one percent during the last two months of 2016 considering it has seen comps fall for 11 straight quarters. But why the optimism?
In an interview with Fortune, Mr. Lundgren pointed to a number of steps Macy’s has taken, including its early start in e-commerce and closing underperforming stores, that he believes puts the company ahead of the curve when it comes to its future challenges.
As to what changes he has seen, Mr. Lundgren points to price transparency as the biggest disrupting factor to hit retailing in recent years. He said it has created a “requirement for all of us to offer unique reasons to shop with us beyond price. It is essential.”
Macy’s, he said, has been able to use its size to get vendors to create exclusive items for its business. It has also moved to offer more dining options in its stores and expanded into categories such as athletic wear to attract new shoppers.
Mr. Lundgren also defended Macy’s decision to bring its off-price Backstage concept into full-price stores.
“That’s the absolutely right way to do it, to bring them into your stores,” he told Fortune. “Use for example the third floor of a three-floor box [store] with off-price so you can capture that consumer who’s already shopping both.”
Based on the holiday same-store sales figure alone, it may be difficult to see how Macy’s has a leg up on competitors such as J.C. Penney and Kohl’s. Penney’s comp sales were up 3.4 percent for Christmas, while Kohl’s posted a 6.9 percent year-over-year gain.
Mr. Lundgren points to the financial stability of Macy’s as its underlying strength. “Three years of a very challenging business and we still have a strong balance sheet,” he said.
- Why Macy’s Departing Chairman Thinks the Chain Has Turned a Corner – Fortune
- Kohl’s is on a roll coming off the holidays – RetailWire
- J.C. Penney is feeling merry about its Christmas performance – RetailWire
DISCUSSION QUESTIONS: What do you see as Macy’s strengths and weaknesses in the current marketplace? Do you share Terry Lundgren’s optimism that Macy’s is on the verge of a rebound?