Now facing nearly three straight years of sales dips, Macy’s is continuing to focus on digital advancements in an attempt to fend off the challenges afflicting department stores and mall brands around the country.
During an announcement of Macy’s earnings for the third quarter of 2017, CEO Jeffrey Gennette presented sales declines of 6 percent, down to $5.3 billion, while predicting that the retailer will hit forecasts by the end of the year. Macy’s CFO Karen Hoguet cited several reasons for the decline: damage from Hurricane Irma and Maria; unseasonably warm temperatures, which transpired to low sales on outerwear; and the ongoing process of closing 100 of its underperforming stores.
Neil Saunders, managing director of GlobalData Retail, wrote in a statement that Macy’s is struggling with identifying a cohesive way to improve sales, instead presenting an unfocused plan that shows a “patchiness of its turnaround program.”
“Macy’s has presented a rather mixed bag of results, with gains on the bottom line overshadowed by the continuing slide in sales,” wrote Saunders. “While there is no doubt that the company has made progress across some areas, change is far from comprehensive or far-reaching. We get the sense that Macy’s fixes issues in a piecemeal way and that it lacks a unified vision for the future of the business.”
On the call, Gennette said Macy’s recent investments in a new loyalty program, as well as enhancements to the Macy’s mobile app, will serve as a catalyst for growth in time for the forthcoming holiday season. As part of the refreshed loyalty program, launched in early October, Macy’s now offers a 5 percent discount and free shipping to top consumers. Meanwhile, improvements to the app have centered on better user experience and functionality.
“To fuel this growth, we’ve significantly improved search engine optimization and expanded delivery processes through buy online, pick up in store,” he said. “We also continue to improve the functionality and user experience of the Macy’s app.”
Gennette also noted that an “elevated and edited product assortment” across the portfolio and “integration of technology, particularly on mobile” has helped improve the customer experience. In the last year, Macy’s has focused on increased selectivity in its product selection. It reported a 7 percent decrease in inventory this quarter, a strategic attempt to streamline its offerings.
Hoguet said the brand saw the most growth in digital sales — specifically in jewelry and shoes — as well as in Macy’s new discount concept store, Backstage. Macy’s first announced it would be launching discount outlet stores last year within 45 of its existing department stores. Gennette said the company plans to expand these stores in 2018.
“Overall, the team is pleased with the third quarter,” Hoguet said. “We’re focused on executing a robust digital sales strategy and continuing to execute on these initiatives. Our inventory is in good shape, which is helping our gross margins; cash flow continues to be healthy.”