Macy’s has been struggling for quite some time now, and these problems seem harder to fix.
On Thursday, Macy’s reported that their sales fell 3.6% in the third quarter, which is their 11th straight decline. According to Thomson Reuters IBES, this was one percentage point worse than expected. Heading into the holiday season, this shows how much business is struggling for Macy’s and other department stores.
Macy’s has been attempting to manifest a turnaround effect. This concept has been named “North Star” by its new CEO of eight months, Jeff Gennette. This strategy has been centering around repairing the atmosphere of Macy’s stores being a special place to shop at with discounts and deals. Macy’s last month relaunched their loyalty program to target its best customers. Any impact could take a while to be shown.
Macy’s has been benefitting from newer and tighter inventory management. This means merchandise is less likely to be on the clearance rack. One positive note from Macy’s third-quarter report is its profit rise on the merchandise side has gone up one-tenth of a percentage point of 39.9 percent. On a larger scale, that has helped its profit more than double in the quarter. The quarter ended October 28th with $38 million from $17 million the year before. Online sales have risen by a double-digit percentage for the 33rd straight quarter.
Gennette has released a statement regarding the 3rd quarter sales.
“Overall, we’re pleased with the results for the third quarter, and we remain on track to meet our full-year sales and earnings guidance for 2017. Importantly, we also saw better gross margin performance primarily due to our tightly controlled inventory position. A highlight of the third quarter was the launch of the new Star Rewards loyalty program — our best customers are responding positively. We also saw continued double-digit growth in digital and are encouraged by the potential of Backstage in Macy’s stores.”
Along with talking about the 3rd quarter sales, Genette has also stated on the loyalty program and his hopes that the reintroducing will bring.
“The loyalty program, special in-store experiences and a strong mobile and online presence will help drive holiday sales,” Macy’s chief said. “We are bringing our fashion authority to bear on holiday trends and have a strong product assortment. Our best customer will also find the convenience she expects and the holiday experiences she loves. Macy’s remains intensely focused on executing all aspects of our North Star Strategy. We expect continued improvement in our trends in the fourth quarter, including a solid lift from loyalty and digital, and intend to head into 2018 with momentum.”
Gennette comes across as very optimistic about this upcoming holiday season. The “World’s Largest Department Store” would benefit greatly from a successful Black Friday and holiday season sales. Upcoming is the 91st Annual Macy’s Thanksgiving Day Parade on November 23rd. It will be broadcasted on NBC at 9 AM to 12 PM Eastern Standard Time.