Despite a slight drop in overall sales, Macy’s has continued to strengthen its business as it bolsters the store experience, revamps its rewards program and forges new partnerships. In Q2 2018, Macy’s saw:
- Earnings per share (EPS) reach $0.70 vs. $0.51 cents expected;
- Revenue fall 1.1%, reaching $5.57 billion vs. $5.55 billion expected;
- Net income reach $166 million, well ahead of the $111 million in Q2 2017; and
- Same-store sales (in owned plus licensed stores) increase 0.5% vs. an expected decrease of 0.9%, marking the third consecutive quarter of comparable store growth.
The department store also raised its outlook for full-year earnings and same-store sales, backed by a healthy consumer spending environment. CEO Jeff Gennette highlighted that the Macy’s, Bloomingdale’s and Bluemercury brands “all performed well” and that the company as a whole continues “to be disciplined with inventory management, which allows us to give our customers more fashion and freshness, while increasing sales and improving gross margin.”
More careful inventory management, combined with various strategic initiatives designed to bolster the store experiences and introduce newer store formats, has certainly helped Macy’s dig out of its hole. The retailer has been expanding its store-within-a-store off-price banner, Macy's Backstage, opening 47 in Q2, with plans to have 120 open by the end of 2018. Shopping trips are up 2X at stores that have a Backstage location inside, and basket sizes are up by more than 30% at those shops, according to Gennette.
Macy’s also is remodeling approximately 50 stores to include upgraded fixtures and food offerings as part of its Growth50 initiative, has expanded a VR pilot to 60 stores and will roll out mobile checkout to all its stores by the end of 2018.
"Macy’s solid Q2 results reflect its continued efforts to enhance the customer experience across all points of contact, whether in-store, online or through mobile," stated Moody's VP Christina Boni in commentary provided to Retail TouchPoints. "Its progress is evidenced by an estimated 2.9% comp sales increase when adjusting for calendar shifts. Macy’s also continues to right size its balance sheet with the voluntary reduction of approximately $344 million of debt in the quarter."