Looks like less store clutter as well as less emphasis on discounts, discounts, discounts is working for Macy’s.
The department store chain (M) on Wednesday reported its strongest quarterly results in years as efforts to streamline assortments, emphasize the quality and presentation of merchandise rather than just focusing on sales events and more exclusive products paid off for Macy’s. Including brands that operate stores within Macy’s, comparable sale rose 4.2% in the first fiscal quarter, well above the 1.4% Wall Street analysts were expecting, according to Consensus Metrix.
That led the company to raise its sales and profit forecasts for 2018, sending shares, which had been battered earlier this week on a Wall Street firm’s downgrade, up 10% in premarket trading.
Under Jeff Gennette, Macy’s CEO of 14 months, the company emphasized what he has called Macy’s “fashion authority,” promoting the use of personal stylists in stores and focusing more on products in promotional materials and less on what percentage off the sales prices is being offered. Gennette’s team has also overhauled Macy’s loyalty program to wring out more business from existing shoppers who had been drifting in recent years. And Macy’s has been working on its 600-plus stores, testing out things like lockers where customers can pick up online orders and more clearly identifying service counters. A couple of years ago, Macy’s began a process to cull more than 100 of its weakest stores, the better to focus on the remaining ones.
“The winning formula for Macy’s, Inc. is a healthy brick & mortar business, robust e-commerce and a great mobile experience,” Gennette said in a statement.
Bloomingdale’s, Macy’s upscale sister chain, also showed signs of improvement, echoing the improvement results at Nordstrom and Neiman Marcus in recent quarter.
In the quarter ended May 5, Macy’s net income rose to $139 million, or 45 cents per share, from $78 million, or 26 cents a share, a year earlier. Excluding one-time charges, Macy’s posted a profit of 48 cents a share, 11 cents better than analysts had expected. Total revenue rose 3.6% to $5.5 billion, also beating analyst forecasts. To be sure, this year’s results compare to paltry first-quarter numbers last year, and the company benefited from the earlier timing of a big sales event, but it’s hard to question Macy’s has some wind in its sails again.