24 November 2021
The Weekly
United States

Macy’s reported Thursday that sales were robust across all of its divisions, and that net income in the third quarter rose to $239mn, compared to a loss of $91mn, in the year-ago period. Total sales for the quarter rose to $5.44bn, compared to $3.99bn in the year-ago period. Comparable sales were up 35.6% versus the 2020 period and 8.7% versus the 2019 period. Part of the sales lifts was due to earlier holiday shopping and Macy’s running a friends and family promotion in the third quarter, instead of the fourth quarter. In the third quarter, the Macy’s brand added 4.4 million new customers. Digital sales increased 19% versus third quarter 2020, and 49% versus third quarter 2019. Last year, Macy’s generated $17.34bn in sales, versus $24.56bn in 2019. By division, Macy’s comparable sales rose 35.1.% from the year-ago quarter and 8.4% from the 2019 period, fuelled by categories that were ‘solid’ throughout the pandemic, including home, fragrances, jewellery, watches and sleepwear. Occasion-based categories, such as dresses, men’s tailored and luggage, continued to recover, and emerging categories, such as toys and pets, showed ‘encouraging results and the company continues to expand on those categories and related brands.’

Bloomingdale’s comparable sales were up 38.5% compared to the third quarter of 2020 and ahead 11.2% compared to the 2019 period. Results were driven by strong sales of luxury handbags, fine jewellery, home, men’s shoes and contemporary apparel. Bluemercury’s comparable sales were up 39.5% compared to the third quarter of 2020, but down 2.2% compared to the third quarter of 2019. Private brands, home fragrance and treatment showed strong sales performance during the quarter. Gross margin for the quarter was 41%, up from 35.6% in third quarter 2020 and up 100 basis points from the 2019 quarter. Improvements were largely due to benefits from pricing, promotion and inventory productivity enhanced by the Polaris strategy. Macy’s raised its full-year guidance. Net sales are seen reaching $24.12bn to $24.28bn, versus previous guidance of $23.55bn to $23.95bn.

An activist investor, Jana Partners, has been pushing for the reengineering at Macy’s with the goal of raising shareholder value. Earlier this year, Saks Fifth Avenue separated its dot-com and store fleet into two separate companies, putting pressure on many retailers to examine the possibility. Macy’s has tapped AlixPartners to examine the ramifications of the move. It also revealed Thursday it will launch a marketplace, powered by Mirakl, in the second half of 2022 to rev up digital sales and provide customers with much greater merchandise choices. Mirakl will integrate into Macy’s and Bloomingdale’s architecture and allow for evolving strategies over time. Macy’s digital sales are on track to reach $10bn in 2023 excluding any gains from the future marketplace.

On the brick-and-mortar front, Macy’s said it’s delaying store closures and that only 10 stores, of the 60 left to be closed, will shut down in the beginning of 2022. It said the 60 stores are all cash flow positive, and the company has been noticing customers returning to stores in ‘C’ and ‘D’ malls, which are less productive, because shoppers feel safer there because they are less trafficked. Macy’s three-year ‘Polaris’ strategy, unveiled in February 2020, called for closing 125 stores, enhancing personalization and the loyalty program, expanding assortments, accelerating digital growth, opening smaller scale off-mall stores, boosting some private brands into billion-dollar businesses, and reducing costs. Next year the company will be rolling out more of its smaller store specialty formats, which include the five Market by Macy’s in Dallas and Atlanta, and one Bloomies store in Fairfax, Va. already operating. Macy’s also operates several Backstage off-price stores and Bloomingdale’s the Outlet units.

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