With Macy’s Inc.’s “Bold New Chapter” turnaround strategy, it boils down to fixing the fundamentals.
“We’re beginning to see green shoots,” Tony Spring, chairman and chief executive officer of Macy’s Inc., said Sunday at the National Retail Federation’s “Big Show” convention and expo in Manhattan, citing progress on the three-year Bold New Chapter turnaround strategy.
“2024 was a year of transition and investment here, and as we’re getting ready to kind of close the [fiscal] year, close the quarter, I’m pleased with the progress that we’re making. We’re also mindful of the fact that we’ve learned a lot along the way and going into 2025 we are more informed, more educated, better prepared to return Macy’s Inc. to sustainable profitable growth.”
Separately on Monday, the company said it expects fourth-quarter 2024 adjusted diluted earnings per share to be in line with the previously issued range of $1.40 to $1.65 and net sales to be at, to slightly below, the low end of the previously issued range of $7.8 billion to $8.0 billion.
Investors reacted by trading shares of the company down 8.1 percent to $14.56 on Monday.
Macy’s also reported on its holiday results and said the 50 “go-forward” department stores as well as Bloomingdale’s, Bluemercury and macys.com all generated positive comparable sales gains during the holiday season, defined as the nine weeks ended Jan. 4.
The go-forward stores are those receiving significant investments for increased staffing in high-traffic areas such as women’s shoes and fitting room areas, fresher products and improved visuals. Due to the positive consumer response to the 50 Macy’s locations getting the most attention, an additional 75 Macy’s locations in fiscal 2025 will receive similar increased investments in assortments and service, Spring said.
Macy’s Inc. overall comped flat for the nine-week holiday selling period, with Macy’s stores, excluding the 50 go-forward locations, performing below expectations and generating negative comparable sales. Macy’s is closing 150 stores through 2026, which will leave 350 Macy’s department stores continuing to operate.
The company expects to report full results for the fourth quarter in early March.
In developing its Bold New Chapter strategy, Macy’s listened to 60,000 customers, both active and inactive, and apparently, they were demanding a lot from the Macy’s brand. “They wanted a better merchandise assortment with both private brands and market brands,” Spring said at the NRF. “They wanted a better service experience with additional colleagues in the store, and a better visual presentation. They wanted a better, modern take on marketing and a better balance in our media mix between digital and traditional marketing. They were looking for a quicker supply chain. They wanted product to be arriving faster when they ordered it. They wanted things to arrive accurately.”
All-in-all, as Spring said, the Macy’s brand needs to execute better on several of “the fundamentals” of retail.
“The Bold New Chapter is our opportunity to reimagine the Macy’s Inc. portfolio,” Spring said at the NRF, who was joined in a panel discussion by his colleagues, Olivier Bron, CEO of Bloomingdale’s, and Maly Bernstein, CEO of Bluemercury.
Tony Spring
Apparently, the reimagining won’t involve any dramatic sell-off of a division.
The panel was moderaetd by CNN’s senior retail reporter Courtney Reagan, who asked whether Macy’s Inc. should spin off Bloomingdale’s or Bluemercury to raise shareholder value. Spring replied that he agreed, “We’re not getting the recognition to the value of these two brands,” in the share price.
“The second part is a question of what’s actually right for the overall marketing of the company,” Spring added. “We continue to believe that there are synergies that [can be] leveraged between the three brands, between warehousing, legal, finance, back-end operations, joint brand negotiation. There’s just so much opportunity for us to leverage the scale of the portfolio. And if you look at other companies deciding they don’t want to be in the public market, or they want to join together with others, because they need to be bigger to be successful, we also need that strength of combined value, but we also will distinguish and make sure that [none] of these brands, becomes one another. The key is for the customer to find something special, something different…And at the same time for us to continue to try to make the case to the public markets that this three-brand portfolio has more value than we are showing today.”
At Bloomingdale’s, “We have to push the boundaries and pursue the recognition of the brand from aspirational to luxury,” said Bron.
Bloomingdale’s, which has been performing well, “has the right foundation to build for the future,” including strong management, and a unique customer base, Bron said. But he added, “I think we can do a little bit more in terms of customer experience and brand experience. We can do better. We can keep improving the services.”
Olivier Bron
Bluemercury’s strategy, said Bernstein, centers on customizing a beauty plan for the individual. “We really focus on understanding you, your needs, your aspirations, and then we curate, using our assortment that’s so driven on performance. We’re so driven on making sure that you get the results that you’re looking for. That’s what we do. We tailor it for every customer that walks through our door,” regardless of gender or age, Bernstein said. “We’re reinforcing our authority in professional skin care and launching into fragrances, and then underpinning that with a rebrand that really reinforces our position in luxury beauty for the modern consumer. You can see that rebrand both in stores and online now. And so between our services, our curation and by being in neighborhoods across the country, that’s what’s really given us that momentum.”
Aside from closing 150 Macy’s stores, the company’s three-year Bold New Chapter strategy, introduced in February 2024, calls for accelerating growth in the luxury sector, opening approximately 15 Bloomies stores, which are smaller, more specialized versions of the full-line Bloomingdale’s department stores; opening at least 30 new Bluemercury stores, and remodeling about 30 Bluemercury stores.
Spring said the Bluemercury and Bloomingdale’s luxury businesses are being “accelerated” and that both brands experienced “great growth in the third quarter.”
At Macy’s, “We picked 50 stores and said, ‘Let’s up our game in terms of merchandise assortment. Let’s change the presentation on the floor in terms of the density of product. Let’s put people back into the fitting rooms to make sure the service experience is better. And we saw three consecutive quarters of improved net promoter scores, in addition to three consecutive quarters of comparable sales growth.”
Spring said the company is utilizing technology to get a better handle on product fulfillment “so that we have fewer split shipments” and “we don’t take as many markdowns because we put the wrong product in the wrong place at the wrong time.” But placing the right products in the right place at the right time, he said, “is always easy to say, and a lot harder to do.”
Spring defended the department store model, saying that he’s been hearing about the death of the department store since he was a child and added, “I’m not that young anymore.”
He said department stores can be in any business or category of merchandise it wants to. “You’re not limited to just men’s or women’s or kids or home…We could basically expand any business or contract any business based on the opportunity that we saw that season.” If women’s is doing well, Macy’s could fund that business by adding staff, advertising and inventory. He said it’s important to think of department stores as offering choice but with curation.
“I don’t want you to tell me what I have to have, but please don’t give me that endless aisle.” He said Bloomingdale’s, Macy’s and Bluemercury give “the consumers so many options, but done in a way that makes it easier to shop.”
“We have decided to close up to 150 stores. We’re going to close a number of stores this year. We announced 66 last week. We’ve doubled down essentially on Bloomingdale’s and Bluemercury as growth engines, as a part of our luxury sector, we’ve decided our store experience can and should be better if we have a smaller portfolio within the Macy’s brand.
“Remember, we’re in the retail therapy business,” Spring said. “We have folks that want to come in and escape their everyday life in some way, shape or form. We are there to try to create the kind of retail experience that people truly enjoy, and that’s why I was never a believer [retailing] was going to be a digital-only business. It was going to be a digital and a physical business where the two actually talk to one another and give the choice back to the consumer.”
“The store plays a very critical role in our structure,” said Bron. “This is where you’re experiencing the brand. Our best marketing investment is actually investing in the store. This is where the magic is happening. So we’re convinced that we have to keep investing in the stores while developing the digital platform.”
And Bernstein added: “In a world where tech continues to grow, we’re prioritizing the human side. We are reinforcing the connection, and we’re using tech to further the relationships…We love getting to learn about our customers, and love putting together that personal beauty plan for you. What works for you is different than what works for me.”
