The 2017 holiday season delivered much-improved results for Macy’s and a few of its department store competitors — and Macy’s has taken its first step to answering doubts on whether it can build on that success. In Q1, Macy’s saw numerous financial metrics surpass analyst expectations, including:
- Net income nearly doubled year-over-year, from $78 million ($0.26 earnings per share) to $139 million ($0.45 earnings per share) vs. an expected $0.37 EPS;
- Revenue increased 3.6% to $5.54 billion vs. $5.43 billion expected;
- Same-store sales increased 4.2% vs. 1.4% expected; and
- Online sales experienced “double-digit growth.”
The positive Q1 results are significant, especially considering some financial analysts are still not convinced that Macy’s can engineer a full turnaround. Two months ago, a Credit Suisse report indicated that Macy’s isn’t closing stores fast enough, suggesting that the department store would have to close 100 more locations to get back to pre-recession levels of sales productivity. More recently, Morgan Stanley analysts expressed the same concern, downgrading Macy’s stock.
The company said all three of its divisions — Macy's, Bloomingdale's and Bluemercury — exceeded expectations during Q1.
At Shoptalk 2018, Jeff Gennette, Chairman and CEO of Macy’s, revealed that the company was undergoing a transformation this year that included a web site and mobile app redesign. The department store seeks editing “to reduce the sea of sameness” in the stores, and recently opened its Star Rewards tiered loyalty program to all shoppers. In Q1, Macy's opened nearly 20 off-price Backstage locations, with plans to open a total of 100 in the fiscal year.
Macy’s continues to experiment with newer channels as part of its transformation, opening “The Market @ Macy’s” marketplace-style pop-up stores in 10 U.S. locations, expanding its VR pilot to 60 stores and introducing mobile checkout nationwide by the end of 2018. Macy's recently acquired Story, a New York-based concept shop, and will be bringing on Story's Founder and CEO, Rachel Shechtman, as Brand Experience Officer to steer the company's creative strategy.