Dive Brief:
- Macy’s Inc. saw another quarter of promising results at 50 stores where it made customer service and merchandising upgrades, according to executives on a Q4 2024 earnings call last week.
- The department store chain revamped 75 additional locations in early February, bringing its reimagined store fleet to 125, according to Macy’s Inc. CEO Tony Spring. The 75 additional locations were reimagined based on learnings from the first wave of upgrades in early 2024, called the First 50.
- However, Spring sees more work to be done. The department store chain is fueling its upgrades by reallocating capital from underperforming Macy’s stores, including through closures, to invest more in customer experience at successful locations, he said.
Dive Insight:
Macy’s Inc., which includes Macy’s, Bloomingdale’s and Bluemercury, is hinging its turnaround strategy on a smaller, but more productive, store fleet. While the early results are promising, only a small portion of the Macy’s chain has been revamped.
Macy’s First 50 stores achieved 1.2% year-over-year same-store sales growth in the fourth quarter or 2024, compared to a 0.9% year-over-year same-store sales decline across Macy’s Inc., according to a company earnings report.
The First 50’s success can be attributed to improved staffing levels, a better product assortment and improved visual presentation, according to Spring. Macy’s also enhanced women’s shoes and handbag staffing at 100 other locations that subsequently outperformed stores without those investments.
“Performance of both the First 50 and the 100 test stores illustrate that when we invest in the customer experience, we can grow sales,” Spring said during the call.
Macy’s closed 64 stores in 2024, ahead of its goal of 50, according to Spring. Macy’s has slated a total of approximately 150 stores to shutter by the end of fiscal 2026, which will leave the chain with approximately 350 stores.
The reimagined stores now represent 36% of all Macy’s locations that will remain after the retailer completes its slated closures, up from 14% at the beginning of 2024, according to Spring.
“The good news is that the investments that we're making in the customer experience are working,” said Adrian Mitchell, COO and CFO of Macy’s Inc. “And what we're doing now is scaling those initiatives to a larger portion of our business. And so, we do expect as we progress throughout the year to actually see momentum build even in this uncertain environment.”
Macy’s is reimagining stores and closing down underperformers at a reasonable pace, according to Neil Saunders, managing director at GlobalData Retail. However, the company needs more change at its reimagined stores “to create a really compelling proposition.”
“Better store experiences help to drive traffic and help to improve sales and average basket sizes,” Saunders said in an email. “However, they are only one part of the equation. Macy’s also needs to look at products, own-brands, customer service and omnichannel.”
Macy’s is making progress in this area as well. The retailer improved its site navigation in the fourth quarter of 2024 and worked on offering more integrated storytelling across digital platforms and stores throughout the year, according to Spring.
Macy’s Inc.’s overall results were bolstered by its Bluemercury and Bloomingdale’s chains, which each saw positive sales growth. Macy’s Inc.’s net income for the fourth quarter of 2024 was $342 million, up from a $128 million net loss in the fourth quarter of 2023.
