Macy's Not Breaking Up But a Lot of Work Ahead

While Macy's claims to have become a transformed company, a difficult road still lies ahead of it. While I didn't attend the call directly, I did want to call out a few notes from their presentation/reports:

- It was notable that Macy's spent a lot of time in its presentation about the value of omnichannel and its performance.

- I believe this time spent was meant to drive a stake through the heart of activists who in the past had claimed the company should be broken up (it should not).

We are also in a different environment than Q1 last year. In early 2021, we had just lapped the worst stores year on record and the best eCommerce year on record. That piled on top of decreasing advertising effectiveness for Facebook for many brands may have given investors pause.

Notably, Jana Partners has recently decreased its ownership percentage of Macy's, which gives you the sense that it may have reconsidered things in this climate - supply chain still not completely sorted, COVID bumpiness, stores resurgence, looming Eastern European war, and maybe concluded there are easier ways to make money elsewhere.

And good on them for making this call. It's a serious, common sense, no-brainer in an operator's world, but common sense is not always common, as we all know.

However. That does not mean that their road ahead is any easier. They will add a marketplace next year. OK, fine, but it's not clear what value this will provide Macy's.

"According to data from M Science, Macy’s had 18.6% of department store market share as of January, trailing Kohl’s at 21.6% and Nordstrom at 33.6%.

They are banking a lot on the second half of the year.

Clawing back half a point of share in a year isn't nothing, but taking share from seriously distressed Kohl's is also not necessarily the model of health.

I'm still left wondering, if I'm a shopper, why am I going to Macy's first?

#retail