Good morning. With Thanksgiving Day just around the corner, Macy’s Inc. is gearing up for the 98th edition of its renowned annual parade. The task of keeping the company in business for more than 160 years still relevant and positioned for growth is now centered around a pivotal strategy that CEO Tony Spring and Adrian V. Mitchell, chief operating officer and CFO, are leading.
To prepare for the holidays, Macy’s, Inc. is hiring more than 31,500 full and part-time seasonal positions for Macy’s, Bloomingdale’s, and Bluemercury stores, as well as its distribution centers.
“Macy’s is still an iconic brand,” Mitchell told me. “We have assets like the fireworks and the parade that’s coming upon us. But how do we create that imagination and that consideration throughout the year in a way that actually translates into sustainable and profitable growth?”
Macy’s Inc., a Fortune 500 company, is among the traditional department stores that have faced headwinds amid competition from big-box stores such as Costco and Walmart and online retailers like Amazon. Macy’s announced in July that its board of directors unanimously voted to terminate discussions with private investors attempting to take over the company—Arkhouse Management Co. LP and Brigade Capital Management, LP.
Instead, the company would continue a strategy it started in February, which has three key priorities, and one is strengthening the Macy’s nameplate.
“Over a number of years, we’ve seen that business decline over time, but we decided to make what I would call some bold moves,” Mitchell said. That included closing 150 underproductive stores, and focusing on 350 stores, which the company believes have the capacity for growth on a sustainable basis going forward, he said.
Out of those stores, Macy’s chose 50 to experiment to see what works. For example, adding staffing back to the stores in key areas, along with new brands, and using findings from customer research to make improvements. “Some of the most relevant pain points for the customer were, “‘You don’t have my style or size’ or ‘You don’t have the brand I was looking for when I came to the store,’” Mitchell explained.
For these first 50 stores, Macy’s has seen two consecutive quarters of comparable sales growth year over year, Mitchell said. “There’s so much that we’re learning as we’re really peeling back the onion on how to make this business better and even healthier,” he said.
The second part of the strategy is to accelerate the growth of Macy’s Inc.’s luxury businesses—Bloomingdale’s and Bluemercury, a chain of American beauty stores. For example, in Q2, Bluemercury saw customers continue to respond well to skincare and new brands, resulting in its fourteenth consecutive quarter of comp sales growth in Q2. The luxury category “over the last several years, has been quite healthy and has continued to experience year over year growth,” Mitchell said.
The third component of Macy’s strategy is using technology to simplify and modernize its operation. The focus is to drive efficiency and simplification for cost savings and higher productivity, Mitchell said.
An example? “We’ve scaled up in two of our fulfillment centers, the level of automation in terms of goods to person, which is very different from what we had before,” he explained. Macy’s is seeing a 7-10% faster rate in customer delivery, with a lower cost base, and a 5-10% faster rate in processing orders. The company is using better forecasting analytics for allocating inventory across the system, and the outcome seen this year is better matching supply and demand, Mitchell said.
As COO and CFO, Mitchell also spearheads change management. “How I think about managing about 85,000 people within the organization is inspiring them to understand why the changes matter, how it makes their lives better, and makes the outcomes for the customers much better as well,” he said.
“We have Black Friday and Cyber Monday and our technology teams and our digital teams have been doing all the pressure testing for the traffic that typically comes through on those days,” Mitchell added.
Sheryl Estrada
sheryl.estrada@fortune.com
Happy Veterans Day to all who’ve served.
The following sections of CFO Daily were curated by Greg McKenna.
Leaderboard
Julie Whalen has agreed to step down from her role as CFO of online travel company Expedia (Nasdaq: EXPE), effective upon her appointment of a successor, and has also resigned from the company’s board of directors. She will remain with the company through Feb. 17 to facilitate a smooth transition, Expedia said. Whalen has spent five years at the company, serving as finance chief since September 2022. She previously held the same role for over 10 years at Williams-Sonoma, according to her LinkedIn.
Karian Wong was promoted to CFO of iRobot (Nasdaq: IRBT), the maker of robotic floor vacuum Roomba, effective Dec. 2. She will succeed Julie Zeiler, who will retire and is expected to remain with the company in an advisory role through Mar. 28, 2025. Wong joined the company seven years ago and has served as SVP and principal accounting officer since 2021. Prior to iRobot, she was a VP and controller at Nuance Communications, a software company, where she spent 11 years. Previously, she worked as a senior audit manager at Ernst & Young.
Big Deal
The wealth management market is preparing to cater to millennial clients, who are expected to inherit $84 trillion in assets from baby boomers by 2045, according to a new report from commercial real estate and investment management company JLL. More than a third of firms plan to increase their number of wealth management locations by up to 10% over the next five years, the report found, with the primary driver cited being proximity to a new client base.
Companies are also rethinking their spaces to serve new demographics. Thirty-six percent of firms have already undergone design and refurbishing within their portfolio, with 43% refreshing existing branches and 29% opening new locations with updated designs.
“Wealth management has been the sleepy backwater of financial services firms’ real estate portfolios for decades,” said Giles Wrench, JLL’s vice chairman of financial services and insurance in the Americas. “The research is compelling: 56% of the respondents are either increasing or contemplating an increase in capital expenditure on their wealth management branches, and none are considering a reduction. We’re also seeing a movement of wealth management branches from higher floors often within corporate office locations to more visible ground-floor retail locations affording prominent branding opportunities.”
Going deeper
One Company A/B Tested Hybrid Work. Here’s What They Found, is a new article in the Harvard Business Review. High-profile companies like Amazon are pulling back from their remote-work policies, citing the importance of in-person connections. A new study conducted at Chinese online travel company Trip.com, however, suggests hybrid work policies can reduce turnover and boost profits.
Overheard
“Nobody has clearly laid out a perfect AI regulation strategy, because, frankly, there probably isn’t one, we’re still so early in this innovation cycle.”
— Aaron Levie, CEO of cloud storage company Box, told Fortune’s Sharon Goldman in an interview about what President-elect Donald Trump’s AI policy could look like in his second term.
