Dive Brief:
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On Wednesday, Macy’s Inc. reported Q1 sales that fell short of expectations, which CEO Terry Lundgren attributed to shipment delays from West Coast ports, lingering severe winter weather, and a downtick from the strong dollar, which hurt sales from international shoppers. He said the retailer's participation in the coalition loyalty program Plenti was already yielding positive results.
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Overall Q1 sales were $6.232 billion, down 0.7% from $6.279 billion in Q1 last year. Q1 same-store sales were also down — on an owned plus licensed basis by 0.1% and on an owned basis by 0.7%. The retailer said it raised its share buyback program by $1.5 billion.
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Lundgren also said that the retailer’s prospects would be bolstered by some of its initiatives, including its acquisition of beauty retailer Bluemercury, a move that boosted its net cash outlay, which was $381 million in Q1, compared to $184 million year over year.
Dive Insight:
Macy’s is investing in technology and closing stores, and last week announced that it would pilot new off-price stores, dubbed “Backstage,” in New York. That last move, the retailer said, is designed to “surprise” shoppers, but the off-price model is mostly new to Macy’s. Other department stores, including Nordstrom Rack and Saks Off 5th have been at it a while, and it’s not really clear that it’s the best or boldest move for a retailer trying to find its groove.
“Looking ahead, we have many reasons to be encouraged about the growth prospects for our business. We are excited by the range of new initiatives being put in place today – both organic and through our new business development organization,” Lundgren said in a statement. “Within our existing business, this includes an intensification of focus in our Top 150 stores, major growth trends in active categories and accelerating success in dresses, the vanguard merchandise category in our omnichannel reorganization. The launch of our new Plenti loyalty rewards program last week was very strong, far exceeding our expectations. Our new Thalia Sodi private brand in ready-to-wear, shoes and fashion jewelry clearly is resonating with customers and selling very well.”
