Macy’s outlined three areas of action designed to improve its business in 2016, including adding new in-store shops of its Bluemercury and Backstage businesses and selling more exclusive and unusual merchandise.
As first quarter results proved, the national retailer continues to struggle with a disappointing financial picture, caused in part by decreases in apparel sales and a weakening of tourist business.
Macy’s reported first quarter 2016 earnings of 37 cents per diluted share, as opposed to 56 cents per diluted share in the first quarter of 2015. Sales in the first quarter of 2016 totaled $5.771 billion, a decrease of 7.4%, compared with sales of $6.232 billion in the same period last year. Comparable sales on an owned plus licensed basis were down by 5.6% in the first quarter. Finally, operating income totaled $276 million or 4.8% of sales for the first quarter of 2016, compared to $409 million or 6.6% of sales for the same period in 2015.
Macy’s shares closed yesterday at $31.38, a drop of 51% over the past 12 months, according to reports.
To help turn around the business, Macy’s has numerous strategies in place to take effect by year’s end: open a total of 15 in-store Macy’s Backstage shops (featuring discounted merchandise); roll out an upgraded jewelry department in over 350 stores; open a total of 22 in-store Bluemercury skincare stores.
Macy’s is also planning to sell wearable technology from Samsung and other resources; add more whimsical merchandise for holiday, including technology innovations in partnership with Brookstone; and invest in more full-time store associates and online customer support. Exclusive collaborations with such celebrities as Elton John, Lady Gaga and Shaun White have been announced.
Macy’s also reiterated that is continuing to look for ways to maximize the value of its real estate, and is currently evaluating proposals from potential partners for joint ventures or similar arrangements involving Macy’s flagship locations and the company’s mall-based store portfolio.
“Our management team is rising to the challenge and aggressively changing our playbook to gain market share and accelerate progress and results for the remainder of 2016 while also continuing to build for the longer term,” said CEO Terry Lundgren. “We are not counting on the consumer to spend more, so we are working harder to give customers more reasons to buy from us by delivering outstanding style, quality and value.”
Continued Lundgren: “And as we rebuild our business for a comeback that we expect will begin later this year, we continue to focus on agility and innovation – supporting and testing new ideas and approaches so we can identify the best way to serve evolving customer needs, and moving fast to scale up the most successful pilots on a broader basis to fully capture growth opportunities.”