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What Macy’s and Nordstrom Are Doing to Improve Top-Line Growth

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Growth expectations

After weak holiday sales, Macy’s (M) expects same-store sales growth (or SSSG) of about 2.0% (on an owned-plus-licensed basis) in fiscal 2018, which ends on February 2, 2019. Macy’s expects SSSG on an owned basis to be 20 to 30 basis points below the SSSG on an owned-plus-licensed basis. Nordstrom (JWN) expects SSSG of about 2.0% in fiscal 2018.

On an owned basis, Macy’s SSSG was 3.1% in the third quarter of 2018, which ended on November 3, 2018, and 2.4% in the first nine months of fiscal 2018. On the other hand, Nordstrom’s SSSG was 2.3% in the third quarter and 2.4% in the first nine months of fiscal 2018. We’ll discuss analysts’ expectations for overall sales of these two companies in part seven of this series.

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Will strategic initiatives help?

Amid intense competition from online retailers, Macy’s and Nordstrom are trying to improve their physical store sales as well as sales from digital channels. Under its Growth 50 strategy, Macy’s has been making significant investments to upgrade 50 select stores and test various initiatives at these stores. After positive results from these stores, Macy’s is gearing up to roll out this concept to 100 additional stores in fiscal 2019.

Macy’s is also trying to improve store traffic through initiatives like At Your Service centers, mobile checkout, and by providing enhanced and localized merchandise assortment. At Your Service centers aim to improve the shopping experience by enabling faster pickups, product returns, and other customer services.

Macy’s is also building its presence in the off-price space through its Backstage stores. Macy’s ended the fiscal 2018 third quarter with seven free-standing Backstage stores and 166 Backstage in-store locations. Macy’s also continues to boost its online sales by expanding its product assortment and by ensuring faster delivery.

Nordstrom’s growth strategies include a focus on digital channels and the off-price Rack business. According to the company, Nordstrom.com ranks among the top ten US e-commerce retailers with about 2.5 million visitors per day. Nordstrom’s off-price digital channels, which include nordstromrack.com and HauteLook, are on track to deliver sales of over $1 billion in fiscal 2018. After achieving success with the Rack concept in the US market, the company opened six Rack stores in Canada also.

Nordstrom continues to enter into strategic collaborations (like recent deals with Something Navy and Atlantic-Pacific) to offer attractive merchandise.

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