New York—Wall Street and retail market analysts may have had to wait three years before meeting Tuesday with Macy’s Inc. about its profit and sales outlook. But apparently—thanks in large part to the success of the department store retailer’s My Macy’s localized buying strategy–the news was good.
The company, which owns 810 Macy’s store and 40 Bloomingdale’s, bolstered its profit forecast for 2010 to $1.75 to $1.80 a share from $1.55 to $1.60. Same-store sales are expected to rise by 3% to 3.5% versus 1% to 2% previous estimates.
While other retailers have been reporting pickup in traffic and sales the first three months of this year, Macy’s revised estimates gave further indication that consumers are indeed returning to shop and spend. The revision also further solidifies that the store’s decision to disperse some buying power into regional planners who give impute into tailoring merchandise for specific regions and stores has been a success.
Accessories magazine plans to delve more into the My Macy’s program and what it means for the retailer’s accessories business in the June 2010 issue, where Macy’s will be featured as Accessories Retailer of the Year.
Since the My Macy’s planned was rolled out about 18 months ago, sales at stores open at least one year have risen four straight months. The company says it expects same-store sales ending in the quarter May 1 to be up about 5% compared with an average decline of about 9.2% in the last two years.
Outlook May Be ‘Conservative’
Macy’s Chief Executive Terry Lundgren appears bullish about the company’s prospects. “I’ve never been more excited about the prospects for growth. I’m not counting on everybody winning,” he said at the meeting. “I’m counting on us taking market share.”
Market analyst point out that despite the first quarters apparent rebound, more increases may be in the offing. Deborah Weinswig, a Citigroup analyst who rates Macy’s a buy, said that although the My Macy’s initiatives are “still in the early innings. We are pleased with the updated 2010 guidance and believe it speaks positively to underlying trends in the business and the potential for market share gains.” Added Thomas Weisel Partners analyst, Liz Dunn: “We believe the company’s 2010 outlook could prove conservative.”’
Among the validation the store cited that the My Macy’s plan is working include: smaller doors have improved performance, quicker response in getting merchandise in stores, expanded private brands, reducing SKUs by 15% to 30% and expanding sales online. Product classifications where the store plans to increase share include jewelry, watches, footwear and beauty. Attracting a younger consumer is also a top priority, highlighted by the back-to-school introduction of the Material Girl junior line designed by Madonna and her daughter.