Macy’s Reports Second Quarter 2022 And Reveals Seven Points Of Action

Quarterly sales on an owned basis were down 1.5% and on an owned-plus-leased basis down 1.6%. The company had sales of $5.6 Billion which were above company’s expectations. Diluted earnings per share were $0.99 compared to $1.08 last year. Showing strong control, inventory was up a mere 7%.

“During the second quarter, we delivered solid results, despite the challenging environment,” said Jeff Gennette, chairman and CEO of Macy’s. “Our teams have consistently responded to the dynamic landscape with disciplined, data-driven actions to ensure the health and stability of our business. We believe that we are well positions to respond to changing consumer behavior. Despite inflationary pressures, consumers continued to shop Macy’s as a style source and leading gifting destination. Additionally, Bloomingdale’s and Bluemercury captured demand for luxury brands, resulting in both nameplates outperforming in the quarter.”

Management spoke about the future at their conference call. Jeff Gennette indicated that Bloomingdale’s will celebrate the 150^th anniversary celebration in September. There will be special events and feature luxury designers. The excitement at Bloomingdale’s will drive omnichannel growth.

Important was the initiatives that Gennette outlined. I have listed them below:

1. Ramp digital capabilities. Including personalization. The digital platform will be optimized to enhance customer experience.

2. Macy’s Marketplace will launch in the next weeks and will include pets, home, kids, baby, maternity, beauty, health and electronics.

3. Macy’s Media Network is growing. Recently company started to test a more engaging advertising experience. Important source of revenues.

4. Private Brands will be reimagined. Beginning in 2023 company will have a portfolio of differentiated brands.

5. Toys “R” Us will expand to every Macy’s location by October 15, 2022 and just in time for the holiday and gifting season. It is a huge opportunity and may also improve in the kid’s business. Company projects longer term $1 Billion in sales.

6. Reposition physical stores to better service customers and support omnichannel market sales growth. Smaller stores for Macy’s and Bloomingdale’s including the first replacement in St. Louis for Macy’s.

7. He social purpose platform will create a more equitable and sustainable future through increased partnership with diverse designers by refreshing icons and style. The company joined Better Cotton. An organization that promotes better standards and practices in cotton farming.

The company is concerned about the consumer environment, which Jeff Gennette labeled “challenging.” The consumer has switched between categories and channels. She also feels intensifuied macro pressures. Gennette points to disciplined action despite the economic pressures.

POSTSCRIPT: Macy’s transition to smaller stores makes sense. It requires editing of the merchandise assortment – maybe eliminating major classifications. Omnichannel will continue to be a strong contributor to sales in the coming years. The environment is currently difficult, but one hopes it will not last a long time.