Macy’s Looks to Future After 3rd Quarter Stumble
On. Nov. 11, Macy’s Inc. reported a 3.6 percent decline in same-store sales for its third quarter. As a result the giant retailer revised its sales and profit forecast for its Winter Holiday sales in the fourth quarter, which sent retail stocks reeling. Sales for the retail giant’s third quarter were $5.874 billion.
Macy’s stocks declined 13.99 percent after the announcement. Stocks from other retailers such as Nordstrom, Dillard’s and Kohl’s also were rattled when they dropped between 3 percent and 9 percent, according to media reports.
While retail stocks rallied in the days following the news, Macy’s forecast slash felt like a proverbial lump of coal on Christmas, not a gift.
The department-store company announced that guidance for the same-store sales for its fourth quarter would decrease by 2 percent from its previous forecast. Macy’s forecast that its fourth-quarter same-store sales would increase by 3 percent, compared with the same quarter in the previous year.
Macy’s Inc. Chairman Terry J. Lundgren expressed disappointment at the slowdown.
“Spending by domestic customers remained tepid, especially in key apparel and accessories categories. Simultaneously, the slowdown in buying by international visitors continued to significantly impact Macy’s and Bloomingdale’s stores in tourist centers, which are some of our company’s largest-volume and most profitable locations,” Lundgren said in a statement.
Macy’s plans to increase sales by focusing on improving the pace of changes. “This includes building on our strength as a leading omnichannel innovator with consistent growth in online sales,” Lundgren said.
Along with increasing investment in mobile and e-commerce shopping, Macy’s will focus on improving the merchandise for its best-performing stores by building assortments in popular department such as jewelry and watches. It will also strengthen visual presentation and increase staffing and local marketing.
Also in the future, it will roll out its off-price concept, Macy’s Backstage. Lundgren said the company will open an estimated 50 free-standing Macy’s Backstage stores in the next two years.
It will also slash its real estate holdings. In early 2016, Macy’s will close more than 35 stores. It will reduce the number of its stores over time. The Macy’s at Los Angeles’ Westfield Century City will close in January. The 136,000-square-foot store will be demolished and replaced with a two-level, 155,000-square-foot Macy’s store, which is scheduled to open in November 2016.
The company also forecast that it will look for new ways to fund redevelopment of Macy’s flagship properties in Manhattan’s Herald Square, San Francisco’s Union Square and Nicollet Mall in Minneapolis. Working with third parties to redevelop those properties will maintain “a robust Macy’s retail store presence while also bringing alternative use into those buildings.”