Macy’s Is Still Behind, Will Be Smaller In The Future
Macy's released their earnings for the period ending May 1, 2020.
A few tidbits I took from their transcript for you all:
"Macy's will be a smaller, more leveraged company for the foreseeable future." They are in a different place now.
They took a $300M write-down on fashion. This is better than carrying this inventory forward, as some others are considering.
Only 6 stores remain closed. That sounds good until you realize stores are operating with limited hours, and there is danger of shutting down again. Also, the biggest stores are in the COVID-19 hot spots (NYC, Miami, LA, Chicago). These stores are facing the most trouble. Why? No tourism and no foot traffic.
Digital ecommerce is showing "double-digit" growth. This is somewhat of a flag for me, and more so indicates that Macy's is still somewhat behind digitally and/or their assortment has a lot exposure to categories which are down to flat, like fashion and wear to work. Some other categories are coming back however - sportswear in particular.
Macy’s cut 4,000 staff - over 25% of their corporate workforce. That cut is significant and deep. There was no department left unaffected.
Some ideas emerged in the comments section when I posted this summary on LinkedIn, with pros weighing in on some of the obstacles Macy’s is facing, and some potential opportunities they may or may not take.
Macy’s could pivot to focus on online ordering with in-store pickup, but this would require them to have a strong grasp of inventory—and in the right places.
Macy’s is encumbered with bulky legacy systems and processes, with e-Commerce as barely an afterthought tacked on to their established model.
It’s going to take some creative thinking and nimble action to turn their long-term leases and tremendous real estate into an asset rather than a burden.
Not all doom and gloom! Tony Strippoli reminds us that “Macys.com is largest fashion retailer point of sale in world in terms of sales turnover.” Is this enough to stay relevant/profitable? How can Macy’s continue to pivot and profit?
