Some improvement in fiscal 2017
Macy’s (M) sales declined 3.7% in fiscal 2017, which ended on February 3. Fiscal 2017 was the third consecutive year that its top line declined. However, the rate of decline was an improvement over fiscal 2016 when sales fell 4.8%. The improvement in fiscal 2017 was mainly due to a strong holiday season in the fourth quarter.
Macy’s continues to invest in its omnichannel capabilities to improve the consumer shopping experience. In 2017, it expanded its buy-online-pick-up-in-store facility and also enhanced its mobile channel. The company’s latest omnichannel efforts include its Mobile Checkout feature in the Macy’s app. The feature is intended to speed up the in-store checkout process. A nationwide rollout of this feature in all its full-line stores is planned by the end of 2018.
Macy’s has also launched an augmented reality furniture shopping experience in the Macy’s app. The feature will allow customers to virtually place furniture products in their living spaces. The company also plans to expand its virtual reality in-store furniture design experience from three stores to an additional 60 stores by fall 2018. The feature allows customers to virtually design and plan the interior of a room for the furnishings they’re purchasing.
Macy’s and other department stores have been facing intense competition from off-price retailers such as TJX Companies (TJX) and Ross Stores (ROST). Macy’s has been trying to capture growth prospects in the off-price space through Macy’s Backstage stores. At the end of fiscal 2017, it operated seven free-standing Backstage stores and 45 Backstage stores inside Macy’s locations. In fiscal 2018, it plans to open another 100 Backstage stores, including stores in some of the premium malls.
The beauty category is also a key focus area for Macy’s. It’s focused on growth for its luxury beauty products and spa retailer, Bluemercury, and plans to open additional freestanding Bluemercury stores in urban and suburban markets. It’s also adding more beauty products and enhancing Bluemercury’s online capabilities. At the end of fiscal 2017, it operated 137 freestanding Bluemercury stores and 20 stores inside Macy’s locations.
The company is also launching a new initiative called Growth 50 in which it will roll out several tested strategies in 50 stores.
We’ll look at Macy’s sales expectations in the next part of this series.