Macy’s says its shoppers are ‘ready to get on with life’
After holding back for almost a year because of COVID-19 related limitations, Macy’s shoppers returned in droves in the first quarter of the year to indulge in things like suitcases, black suits, and home furnishings. And the department store’s CEO expects the shopping rebound to continue.
Macy’s reported on Tuesday that comparable sales, a metric that includes e-commerce and strips out the impact of newly opened or closed stores, rose a staggering 62.5% in the quarter ended May 1. That was a year after Macy’s stores were largely shut for weeks at the start of the pandemic. But it was well above the 45% increase Wall Street analysts were expecting, according to Consensus Metrix.
Macy’s chief Jeff Gennette ascribes the huge increase to consumers being “ready to get on with life” after so many months of constrained shopping. Because of the strong start to the year and continued progress in vaccination rates, Macy’s raised its full-year forecasts and now expects 2021 sales of almost $22 billion, almost $2 billion more than its original forecast.
“They have a huge desire to get out and travel to go visit loved ones they haven’t seen in 15 months,” Gennette tells Fortune, alluding to the jump in domestic travel of late. “Our luggage business is off the hook.”
And that in turn, is part of a desire to refresh wardrobes as they go on vacations or travel to weddings, as well as invest in their homes, he said. “They’ve been sitting in their homes; they’ve been looking at ways to upgrade if they’ve got that fever.” (Home Depot also reported stellar results with comparable sales up 29.9% in more proof of the ongoing boom in Americans upgrading their homes.)
But Gennette conceded that Macy’s got a big lift from stimulus checks as well, as did Walmart. Comparable sales there rose 6% for its U.S. stores, well above analyst forecasts. “In the U.S., customers clearly want to get out and shop,” Walmart CEO Doug McMillon said in a statement.
Gennette thinks Macy’s will hold on to good portion of these gains, much of which came from an e-commerce surge, but he acknowledged Macy’s has some work to do to improve its stores. With more of Macy’s sales online, there is a need to have neater stores that do more than just serve as warehouses.
“Our stores need to be just less cluttered, less confusing, more edited,” he said. That means clearing out aisles, using more mannequins, and showcasing merchandise better. “We’re not doing a great job in every single one of our stores. But we definitely have an ambition to do that,” he said.
Macy’s will need to achieve that if it wants to arrest a yearslong erosion in its business. Despite the big gains in the first quarter, comparable sales were 10% below their levels from the same quarter of 2019. “Macy’s is still a legacy player which needs to find a new purpose and energy if it is to survive in the modern retail era,” Neil Saunders, managing director of GlobalData, said in a note.
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