Macy’s Is Running Out of Levers to Pull

Things looked a small improved for Macy’s Inc. in a latest entertain — but only given a bar for a beleaguered department-store sequence had been set so low.


The association reported on Thursday that allied sales, a figure that includes online sales and same-store sales, fell 2.8 percent year-over-year. That’s not utterly as large a dump as analysts had expected, though it still creates for a tenth uninterrupted quarterly decrease on this measure. 

No matter what, such a settlement would be discouraging. But it is especially shocking when we cruise how aggressively Macy’s has been fighting for a life as consumers change to digital shopping. Macy’s has already pulled a lot of a levers that competence give it uninformed momentum. It simply doesn’t have many left to pull.

Of all a vital dialect stores, Macy’s, I’d argue, has a firmest grasp of only how existential a digital hazard is.

Terry Lundgren, a longtime Macy’s CEO who recently retired, spoke frankly of a attention being “overstored” prolonged before many other sell leaders did.  Jeff Gennette, a stream CEO, sounds a same records on this topic. Gennette told investors behind in May that a doubt running Macy’s many new turn of store closures was, “If we were building a Macy’s code from a belligerent up, what [market areas], what vital cities would we be in?” 

That mind-set has led Macy’s to be some-more active than a pivotal rivals about pulling behind on full-line, brick-and-mortar dialect stores.

While Kohl’s Inc., for example, has assured itself a portfolio of some-more than 1,000 stores doesn’t need most pruning, Macy’s gets it: Most bequest retailers will need fewer locations as some-more offered moves online.

Macy’s has also been artistic in pardon adult cash. In 2016, it appointed Doug Sesler to a newly combined comparison care purpose designed to try ways to get value out of a genuine estate portfolio. The association says it got $877 million from offered such resources in 2015 and 2016. Those formula offer hints about since an romantic financier is now enlivening Dillard’s Inc. to do something similar.

Through store closures and efforts to frame out layers of management, Macy’s is axing about 10,000 jobs this year. That suggests a tradesman knows modest, incremental stairs aren’t adequate in a impulse pursuit for decisive, unconditional change.  

Along with these demonstrably useful steps, Macy’s has taken some other confidant tacks for that a outcome is still uncertain.

Macy’s acquired Bluemercury in 2015 for about $210 million, adding a code that is generally well-positioned for a stream sell environment. The beauty difficulty is generally one of a few splendid spots in retail, and Bluemercury’s sauna services are a good fit for consumers selecting to spend some-more mostly on experiences.

At a time a merger was announced, Bluemercury had about 60 locations; Macy’s has roughly doubled a swift given then. But in a past dual years, Ulta Beauty Inc. has changed even faster, opening about 200 stores.

Macy’s has also combined Bluemercury shop-in-shops to 20 of a dialect stores, though it is removing outflanked there, too. JC Penney Co. Inc. has fast stretched a Sephora shop-in-shops, with during slightest 588 open and some-more on a way.

Bluemercury is a good brand, though Macy’s might be relocating too solemnly to maximize a potential.  

Then there’s a Macy’s off-price concept, famous as Backstage. Macy’s continues to contend a tests of this thought are “successful,” and it might have done a right call by not perplexing to open many standalone Backstage stores, given a off-price business is fast removing crowded.

But if Backstage is mostly only an area within existent Macy’s stores, it is tough to see how it does most to attract new customers. And it is tough to see how it is meaningfully distinctive from Last Act, a name for Macy’s new clearway areas.

Add all of these efforts up, and one thing is clear: Macy’s has already taken an contentment of stairs to urge a business, and it hasn’t been enough. So even though Thursday’s formula showed some improvement, it’s still tough to see how Macy’s turns itself around.

This mainstay does not indispensably simulate a opinion of Bloomberg LP and a owners.

  1. It’s value observant that Lundgren let these store closures be announced on his watch, when he was still in a tip pursuit though had already announced his arriving retirement. It was a intelligent pierce that meant incoming CEO Jeff Gennette didn’t have to flog off his reign by delivering a news.

To hit a author of this story:
Sarah Halzack in Washington during shalzack@bloomberg.net

To hit a editor obliged for this story:
Mark Gongloff during mgongloff1@bloomberg.net


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