Macy’s Talks Growth Initiatives at Nomura Conference



Nomura retail conference

At the Nomura retail conference on June 9, Macy’s (M) management discussed its growth and restructuring initiatives to drive its top line growth. In the previous parts of this series, we discussed some of the growth initiatives, which include off-price expansion and some new partnerships.

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Revenue performance

In fiscal 2014 ending January 31, 2015, Macy’s net sales increased by 0.6% to $28.1 billion. Macy’s underperformed Nordstrom (JWN) and TJX Companies (TJX), which respectively reported 7.7% and 6% in net sales growth in the comparable fiscal year. Macy’s makes up ~0.1% of the SPDR S&P 500 ETF Trust (SPY).

Restructuring initiatives

In January 2015, Macy’s announced the restructuring of its merchandising and marketing functions to make them consistent with its omni-channel approach, which integrates its online and store businesses. The integration has helped the company manage its inventory better. For instance, an online order can now be delivered from Macy’s fulfillment centers or from any of its stores.

Previously, separate organizations purchased and marketed the merchandise selections for Macy’s stores and online business. The use of a radio frequency identification tracking system will facilitate a single view of inventory at the company’s stores and websites.

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In early 2015, Macy’s made some structural changes to its management team for better execution of its omni-channel approach. These changes include the appointment of Timothy G. Baxter as chief merchandising officer, Peter Sachse as chief of innovation and business development, and Patti H. Ongman as chief merchandise planning officer.

Speculation on real estate sale

At the Nomura retail conference, Macy’s management also talked about its real estate. Several hedge funds are putting pressure on Macy’s to contemplate selling some of it.

At the conference, Macy’s chief financial officer, Karen M. Hoguet, said that the company believes in creating real value for its real estate. Macy’s feels that the decision to monetize its real estate is a complicated one. Troubled department store Sears (SHLD) has created the Seritage Growth Property REIT to facilitate the sale and leaseback of its real estate.

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