Macy’s new CEO
Jeff Gennette assumed the role of Macy’s (M) CEO on March 23, 2017. Gennette has served as Macy’s president since March 2014. He succeeds Terry J. Lundgren, who served as Macy’s CEO for over 14 years. Lundgren will continue to serve as the executive chairman of Macy’s board.
Macy’s has seen some tough times over the last two fiscal years, with sales declining. The department store chain’s fiscal 2016[1. Fiscal 2016 ended January 28, 2017] sales fell 4.8%. This fall was greater than the 3.7% fall seen in fiscal 2015. Fiscal 4Q16 was the eighth consecutive quarter of lower sales for Macy’s.
What’s dragging down sales?
Peers Kohl’s (KSS) and JCPenney (JCP) also delivered weak sales in fiscal 2016, with sales falling 2.7% and 0.6%, respectively. Nordstrom (JWN) reported a 2.2% rise in its fiscal 2016 revenue. However, this growth was due to its off-price Nordstrom Rack stores, which offset the weakness in its full-line stores.
Macy’s and peers’ weakness in sales is due to the growing strength of online retailers such as Amazon (AMZN). Consumers are increasingly finding online shopping to be more convenient. Off-price retailers such as The TJX Companies (TJX) and Ross Stores (ROST) are also emerging as a major threat to department stores. Off-price retailers offer their merchandise at deep discounts to department store prices.
In this series, we’ll discuss Macy’s efforts to improve its sales, online channel, and earnings. The series will also include a discussion on the company’s valuation and analysts’ recommendations.