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Can Macy’s Initiatives Boost 2Q15 Same-Store Sales Growth?

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Macy’s same-store sales estimate

As mentioned in Part 1 of this series, Macy’s (M) is scheduled to announce its results for 2Q15 on August 12. Based on the guidance issued in May 2015, Macy’s expects its 2Q15 same-store sales growth, including its licensed stores, to be positive but below 2%. The guidance for fiscal 2015 same-store sales growth, including the licensed stores, is ~2%. Excluding the licensed stores, the same-store sales growth is expected to be slightly lower than 2%.

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Macy’s underperformed peers in 1Q15

Macy’s has been underperforming most of its peers. In 1Q15, Macy’s same-store sales declined by 0.7% on a year-over-year basis. Same-store sales of Nordstrom (JWN), Kohl’s (KSS), and JCPenney (JCP) grew by 4.4%, 1.4%, and 3.4%, respectively, in 1Q15. Macy’s also underperformed off-price retailer TJX Companies (TJX), which posted same-store sales growth of 5% in the comparable first quarter.

Macy’s same-store sales growth in 1Q15 was negatively impacted by weakness in certain lines, including fashion jewelry and watches, tabletop items, and housewares. Also, growth in the general merchandise, apparel, and furniture categories was slower than expected.

Macy’s makes up ~1.0% of the portfolio holdings of the Consumer Discretionary Select Sector SPDR ETF (XLY).

Initiatives to boost same-store sales 

Macy’s is expanding its beauty business through the opening of Bluemercury shops within its stores. The company acquired Bluemercury, a luxury beauty product and spa services retailer, for $210 million in March 2015. The company is also expanding its product assortment. Some of the recent merchandise expansion initiatives include:

  • the US launch of intimate apparel brand Heidi, launched in April 2015 in collaboration with supermodel Heidi Klum
  • a collaboration with Martha Stewart Living Omnimedia (MSO) to launch Whim, an exclusive bedding and dinnerware collection
  • a partnership with Dormify, a dorm furnishings online retailer, in June 2015, providing exclusive bedding collection at Macy’s stores and website
  • the January 2015 launch of the Thalia Sodi apparel, shoes, and jewelry collection

The next part of this series will discuss the expectations for Macy’s 2Q15 earnings.

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