Macy’s Bold New Chapter Strategy Shows Promise as Retailer Focuses on Omnichannel Shoppers
Will Macy’s Bold New Chapter strategy be enough to save the iconic company and return it to profitable growth?
Macy’s is facing a challenging period marked by declining sales, changing consumer habits and pressure from activist investors calling for a fiscal overhaul. In recent years, the company has dealt with falling revenue and a drop in foot traffic to its stores, as well as the influence of eCommerce competitors. Additionally, most of its new customers are arriving through digital means. At the same time, activist groups have pushed for greater efficiency and profitability, urging Macy’s to rethink its traditional business model.
Against this backdrop, Macy’s is investing in its future through its Bold New Chapter strategy, highlighted by an initiative dubbed First 50, referring to 50 of its store locations.
Unveiled in February, this strategy aims to modernize its operations, improve customer experiences and open new growth opportunities. A central focus is to revamp 50 key stores and use them as prototypes for the next generation of Macy’s locations.
While the company has faced difficulties in recent quarters, its leadership remains optimistic about the future, with the goal of delivering more personalized shopping experiences for consumers.
Third-quarter results released Wednesday (Dec. 11) show a 1.9% increase in comparable sales at these revamped stores, marking the third consecutive quarter of growth. The performance illustrates the potential for the company’s overarching strategy, which includes implementing staffing tests in women’s shoes and handbag departments in 100 additional locations.
Additionally, Bloomingdale’s and Bluemercury reported positive growth (comp sales up 1% and 3.3%, respectively). For Bluemercury, it marked its 15th consecutive quarter of comparable sales growth.
“Although we still have work to do, we believe our Bold New Chapter initiatives get us even closer to our goal of becoming a more profitable Macy’s Inc.,” CEO Tony Spring shared with analysts. “With our NPS scores up over 400 basis points, these are strong indicators the changes we’re making are the right changes. We had to make the necessary changes to make a better shopping experience. We have to provide the customer with a compelling reason to shop at Macy’s. This is a priority. We set out this year to change the Macy’s experience.”
But Macy’s challenges are far from over. Third-quarter overall net sales fell 2.4%, to $4.7 billion, and comparable store sales decreased 2.4%. The decline was attributed to weak sales at non-First 50 locations, as well as struggles in digital channels and cold weather categories.
Despite these challenges, Macy’s leadership remains focused on executing its Bold New Chapter strategy and believes that sustained improvements in customer experience and product offerings will eventually drive growth, Spring said.
The company is also addressing its operational efficiency, phasing out legacy technology and optimizing its supply chain to improve the customer experience and increase product availability. These changes are part of a larger effort to simplify and modernize Macy’s operations, which includes a more agile approach to inventory management and an emphasis on digital tools to enhance both in-store and online shopping experiences.
“We’re certainly seeing the customers who are familiar with those stores spend more and increase their visits, and we’re beginning to see some new customers,” Spring said. “The reality is more of our new customers today come through our digital channel. So, it’s our opportunity to bring them into a location to make them an omniconsumer.”
Chief Financial Officer Adrian Mitchell said he’s “very encouraged” by the First 50 stores’ performance.
“We’re leaning into the value orientation of today’s consumers,” he said. “Managing inventory carefully and ensuring that we’re offering value that aligns with what the customer is looking for is key. We continue to invest in the fundamentals of the business and we’re encouraged by the quality of execution. The momentum we’re seeing building, especially in our First 50 locations, is very encouraging. A lot of these investments are beginning to yield fruit.”
As customers see the change in store and site experiences, Spring said, “we see more opportunity for growth. We’re not in a year of testing, We’re in a year of scaling. The customer has shown post-election a real interest in shopping in a variety of categories, which bodes well for all three of our nameplates.”
Company officials also addressed the multimillion-dollar “intentional” employee accounting error.
“As a result of the independent investigation and forensic analysis, the company identified that a single employee with responsibility for small package delivery expense accounting intentionally made erroneous accounting accrual entries to hide approximately $151 million of cumulative delivery expenses from the fourth quarter of 2021 through the third quarter of 2024,” the company said in its earnings release.
“As previously communicated, the investigation determined that this matter had no impact on the company’s reported net cash flows, inventories, or vendor payments,” the statement continued. “We’ve concluded our investigation and are strengthening our existing controls and implementing additional changes designed to prevent this from happening again and demonstrate our strong commitment to corporate governance. Our focus is on ensuring that ethical conduct and integrity are upheld across the entire organization.”
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