Macy’s new strategy is already paying off
Confident shoppers flocked to Macy’s over the holiday season, filling their baskets with fragrances, beauty sets and other gifts that gave the retailer a much-needed boost as it started the new year.
The department store chain, which has closed dozens of locations, regained its stride in the final months of 2017, buoyed by brisk sales, a popular new loyalty program and revenue reaped from selling off shuttered stores and other properties.
Investors were pleased, and the company’s stock price rose 3.5% to close at $28.40 Tuesday.
Sales at stores open at least a year rose 1.3%, and adjusted earnings per share of $2.82 matched the forecast of analysts with S&P Global Intelligence, as did sales revenue of $8.67 billion, which topped by 1.8% that same quarter in the previous year.
Like many of its peers, the iconic de- partment store chain had faltered recently as it struggled to adjust to an environment where shoppers increasingly buy goods online.
But Macy’s “North Star Strategy,” which focuses on customer service, exclusive-to-Macy’s products, online shopping and re-evaluating its real estate holdings, is starting to bear fruit. Its net income rose to $1.33 billion in the fourth quarter from $475 million a year earlier.
“We are committed to returning Macy’s, Inc. to comparable sales growth in 2018 and will build on the momentum we created in the fourth quarter of 2017,” said Jeff Gennette, Macy’s chairman and CEO.
He added that during the all-important holiday season, the company made sure it didn’t have more items on its shelves and in supply than it could sell. “We head into 2018 with an improved base business, healthy inventories, a focused and engaged organization and a clear path to return Macy’s to growth,” he said.
Like many retailers, Macy’s has been trimming the number of its physical stores, announcing in 2016 that it would close roughly 100. Sales of some of those closed locations, along with other properties such as warehouses and parking lots, allowed the company to pocket $411 million last year.
Going forward, Macy’s intends to continue improving the quality and stylishness of its clothing, Gennette said in a call with investors.
And it will start allowing members of its Star Rewards loyalty program to earn points for purchases made with other credit cards — not just those with the Macy’s brand. The incentive program was launched on Oct. 2 to attract new customers and enhance the retailer’s relationships with the 10% of loyal shoppers who have accounted for roughly half of the company’s sales.
Customers visiting 50 of the retailer’s stores will also be able to speed up their checkout process, scanning products with their smartphones as they shop, and only stopping to have an employee take off the tags.