Macy’s Reports 1.1% Drop in Net Sales, Booming Mobile Growth in Q2

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Macy’s Inc. reported a 1.1% decline in net sales for the second quarter, from $5.6 billion to $5.5 billion, with comp sales inching up just 0.5%. For the first half of 2018, net sales were $11.1 billion, up 1.1% from $10.9 billion in 2017.

Without specifying, Macy’s Chairman and CEO Jeff Gennette said the retailer saw double-digit ecommerce growth in the quarter. Mobile sales via the Macy’s app were up 50%+ in the first half of 2018.

“Overall I’m feeling good about where we are today and I am encouraged by the momentum we have heading into the back half of 2018,” said Gennette in an earnings call.  “At the heart of our improved performance is a consistent focus on the customer.”

Gennette said North Star, Macy’s five-point customer strategy, is built around improving the journey, every step of the way, removing points of friction.

“As I’ve said before, our recipe for success is healthy stores, a robust ecommerce business and a powerful mobile app,” said Gennette. “Our customer wants a great experience anytime and anywhere she shops with us.”

Gennette said Macy’s digital business was especially strong in July. The company’s Bloomingdale’s brand saw strength in its men’s department, handbags and cosmetics during Q2.

Gennette said Macy’s is seeing positive change in shopping behavior across the various tiers of its loyalty program. “Our best customers are spending more and new customers are coming into the program,” he said.

Macy’s Backstage expansion is continuing rapidly. The company opened 47 locations in Q2, for a total of 65 thus far in 2018. “We’re now on track to complete 120 openings this year,” said Gennette. “This includes the expansion of Backstage to the West Coast and to some of our premium doors.”

Gennette said adding Backstage makes existing stores more productive, gives customers a new experience and expands the base.

Macy’s is also expanding its online assortment, Gennette said, including more national and private brands and additional categories. “We’re building on our merchandising strengths and adding selection where our customer already signaled interest,” he said.

The company is also expanding its omnichannel options, including ship-to-store and pickup-in-store. Ship-to-store expanded to 50 locations in the quarter, and will be in almost every store by the end of Q3.

“We’re also refining (pickup in store) to improve the customer experience,” said Gennette. “To support both programs, we have nearly completed the rollout of ‘At Your Service’ stations in every store to make pickup easy and quick.”

Macy’s Inc. will have “At Your Service” centers and mobile checkout in almost every store.  The stores are getting more fashion and a more edited assortment. It is also activating 60 virtual reality furniture locations in the third quarter.

Gennette said Macy’s “Growth50” initiative has resulted in improved customer satisfaction scores in those locations. Announced in February, Growth50 is bringing experiments from Macy’s Woodbridge Township, NJ location to 50 stores nationwide, including an expansion of Backstage and Big Ticket, more fashion and localized product, improved fixtures and facilities and expanded in-store technology.

“The investment we’re making in these 50 stores is paying off, and supports our thesis that with the right talent and investment, our stores can be vibrant, productive and profitable shopping destinations,” he said.

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