Macy’s Last Act
Macy’s (M) tested its Last Act concept in 40 locations. Based on the positive customer response, the company has now rolled out the concept to all its stores nationwide. Macy’s Last Act section in its stores consists of clearance merchandise with deep price reductions, but the merchandise is excluded from coupons and additional offers. The company has separate Last Act sections for it women’s and men’s section.
At the Bank of America Merill Lynch Consumer and Retail Tech Conference held on March 15, Jeffrey Gennette, Macy’s president, stated that the company now plans to roll out the Last Act concept to the Kids section as well.
Dismal same-store sales
Macy’s same-store sales fell in each of the four quarters of fiscal 2015 ended January 30, 2016. For the full-year fiscal 2015, Macy’s same-store sales fell by 3%. The company underperformed its peers Nordstrom (JWN), Kohl’s (KSS), and JCPenney (JCP), which reported same-store sales growth of 2.7%, 0.7%, and 4.5%, respectively. The First Trust Consumer Discretionary AlphaDEX Fund (FXD) has 1.3% exposure to Macy’s.
The 4.8% decline in Macy’s same-store sales in 4Q15 was primarily due to a fall in international spending and unfavorable warm weather that negatively affected the sales of cold weather merchandise.
Aside from Last Call, Macy’s initiatives to increase its same-store sales include the opening of off-price Macy’s Backstage stores within 15 Macy’s locations. Macy’s believes that opening in-store Backstage stores within its locations will help in driving additional customer traffic. Also, it will provide an opportunity to offer price points and merchandise categories like home décor, baby gear, and toys, which are currently not carried at Macy’s.
Macy’s is also working on its Top Door strategy, which involves enhancing the merchandise and other aspects of the top 150 locations. Macy’s is enhancing its presence in the beauty business through its Bluemercury stores. Macy’s acquired Bluemercury, a luxury beauty products and spa services retailer, in March 2015. The company opened 15 new Bluemercury stores in 2015, bringing the total number of locations to 77.
Macy’s has also been aggressively enhancing its fine jewelry business by bringing in better brands and by strengthening selling skills. We’ll discuss the company’s online business in the next part of this series.