Is improvement expected?
Macy’s (M) sales grew in the fourth quarter of fiscal 2017 after declining for 11 consecutive quarters. However, the company again reported a fall in its sales in the second quarter of fiscal 2018. Macy’s sales grew 3.6% in the first quarter of fiscal 2018 but declined 1.1% in the second quarter. The company’s sales for the third quarter, which ended on November 3, increased 2.3% to $5.4 billion and were in line with analysts’ estimates.
Analysts expect Macy’s sales to decline 1.6% to $8.5 billion in the fourth quarter, which ends on February 2, 2019. For full-year fiscal 2018, analysts forecast Macy’s sales to rise 0.7% to $25.0 billion. Currently, analysts expect Macy’s sales to grow 0.4% to $25.1 billion in fiscal 2019.
Under its “Growth 50” plan, Macy’s has been investing in and focusing on 50 of its stores to test certain concepts and revamp them to attract customers. These upgraded stores performed well in the third quarter, and the company plans to roll out this concept to 100 more stores in fiscal 2019.
Macy’s digital sales grew by double digits in the third quarter. The company’s efforts to expand its online assortment and facilities like buy-online-ship-to-store as well as buy-online-pick-up-in-store are boosting its digital sales. Through the buy online ship to store facility, customers can choose from merchandise anywhere in Macy’s physical stores or online and then get it shipped to a neighborhood store for pickup.
To support these above-mentioned pick-up facilities, Macy’s has rolled out “At Your Service” centers to all its stores. These centers take care of product returns, facilitate quick and convenient pickups, and provide other customer services.
One of the key elements of Macy’s growth strategy is the expansion of the off-price Backstage stores. As of the end of the third quarter, the company operated seven free-standing Backstage stores and 166 Backstage stores within Macy’s locations.
We’ll discuss Macy’s earnings and margins in the next part of this series.