13 April 2022
The Weekly
United States

Macy’s underscored their cautious approach to the planning where low single-digit sales gains are seen amidst a highly unpredictable retail climate. Growth opportunities for the $24.5 bn Macy’s would include developing new categories of business through marketplace formats in the second half of this year; Engaging and retaining more customers from last year through personalization efforts; Infilling markets with off-mall formats like Bloomie’s, Market by Macy’s and Backstage; Location-level pricing for individual stores to offer different depths of promotions; Macy’s media network, where vendors can devote marketing dollars to drive sales on macys.com or bloomingdales.com. and increased efforts to monetize real estate.

Currently, Macy’s has 10 developers actively looking at opportunities around the country, to convert certain Macy’s stores into mixed use properties or taking certain Macy-owned parcels, such as parking lots, and converting them to restaurants, offices, medical complexes or residences. In the current retail climate, this year moves to a more intense promotional environment than what was seen last year as inflation is higher than expected and supply chain problems are not solved. On profitability, Macy’s characterized as a double-digit EBITDA business going forward, with that and disciplined investments they should have a very healthy free-cash flow. The company is targeting a 38% gross margin rate in 2022, compared to the mid-30s in previous years. Macy’s debt is entirely unsecured and there are no material debt maturities for another five years. Additionally, their supply chain network is fundamentally decades old but automation upgrades will be coming on line in 2023 and 2024.