Sales under pressure
As discussed earlier in this series, Macy’s sales continued to fall for the seventh straight quarter in 3Q16. In 3Q16, which ended on October 29, 2016, Macy’s same-store sales fell 3.3% on an owned basis. The company’s same-store sales fell 2.7% in the quarter on an owned plus licensed basis.
Macy’s is taking several initiatives to boost its sales, including focusing on its Bluemercury beauty business and its off-price Macy’s Backstage stores. The same-store sales growths of Nordstrom (JWN), Kohl’s (KSS), and JCPenney (JCP) were 2.4%, -1.7%, and -0.8%, respectively, in 3Q16.
Focus on Backstage stores
Macy’s entered the attractive off-price retailing space through its Macy’s Backstage stores in 2015. Consumers are increasingly shopping in off-price stores to take advantage of bargain deals. The established players in the off-price space include TJX Companies (TJX) and Ross Stores (ROST).
In Macy’s 3Q16 conference call, its chief financial officer, Karen Hoguet, stated that in 4Q16, the company will test-run Backstage pop-up apparel shops in about 45 Macy’s stores. The company also plans to add new merchandise categories in 13 such stores, including toys, home decor, and products featured in the store’s checkout area.
Other growth initiatives
The company continues to invest in its Bluemercury beauty business. Macy’s acquired Bluemercury, a luxury beauty products and spa services retailer, in March 2015. Macy’s is focused on sales growth in its freestanding Bluemercury stores and enhancing the strength of its bluemercury.com business. The company is also expanding its Bluemercury products and boutiques to its Macy’s stores. In 3Q16, the company opened seven freestanding Bluemercury specialty stores.
Macy’s is also enhancing its digital capabilities. The company experienced double-digit growth in its digital business at both macys.com and bloomingdales.com in 3Q16. Some of the steps the company has taken to boost its online sales include the expansion of its merchandise assortment, its Buy Online, Pick Up in Store facility, and its same-day delivery facility.
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