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Are Macy’s Sales Expected to Fall or Improve in Fiscal 4Q17?

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Jan. 5 2018, Published 9:35 a.m. ET

Dismal trend in sales

For Macy’s (M), fiscal 3Q17 (which ended on October 28, 2017) was the 11th consecutive quarter in which its sales fell. Macy’s sales fell 6.1% in the third quarter. Sales of rival Kohl’s (KSS) rose 0.1% in fiscal 3Q17, while JCPenney (JCP) reported a 1.8% sales fall.

The growing strength of online retailers such as Amazon (AMZN) has adversely affected the market share of department stores. Off-price retailers such as TJX Companies (TJX) are also stealing customers from Macy’s through their attractive discount offers.

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Macy’s growth strategy

To improve its performance, Macy’s is continuing to enhance its merchandise. For instance, in November 2017, Macy’s launched an eveningwear collection by design team Sachin & Babi Ahluwalia. The company launched this collection in 149 Macy’s stores and on macys.com. The company is also focusing on categories such as beauty, footwear, and jewelry.

On October 31, Macy’s announced the launch of the Samsung Experience at its Herald Square flagship store in New York. The Samsung Experience store within a store is a 1,000-square-foot space in Macy’s Herald Square store. It offers an extensive range of Samsung products, including mobile, virtual reality, QLED television, smart home, and home audio products.

Macy’s continues to enhance its e-commerce capabilities as more and more consumers opt for online shopping. In the company’s fiscal 3Q17 conference call, CEO Jeffrey Gennette mentioned that the company had shifted more of its media spending to its digital business. To boost its online sales, the company is continuing to work on search engine optimization and the functionality and user experience of its mobile app. Macy’s is also attracting consumers with delivery options such as same-day delivery and buy online, pick up in store.

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Updated sales expectations

On January 4, Macy’s announced its 2017 holiday sales and updated its previously announced sales guidance. The company now expects its total sales to fall in the 3.6%–3.9% range in fiscal 2017, which ends on February 3, 2018. The company’s previous guidance anticipated a fall in the 3.2%–4.3% range in fiscal 2017. Macy’s now expects its fiscal 2017 same-store sales on an owned basis to fall between 2.4% and 2.7%.

Analysts expect Macy’s sales to fall 4.1% to $24.7 billion in fiscal 2017. As indicated in the chart above, Macy’s sales have fallen in the past two fiscal years. Following the company’s holiday sales report, analysts now expect Macy’s fiscal 4Q17 sales to rise 0.3% to over $8.5 billion. Macy’s is scheduled to announce its fiscal 4Q17 results on February 27, 2018.

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