Macy’s, a retailer that also owns Bloomingdale’s and Bluemercury, said on Tuesday that its sales fell 29 percent last year, highlighting the price the pandemic affected shopping mall chains and the uncertainty about how traditional retailing will recover in a post-pandemic world.
Macy’s said sales fell to $ 17.3 billion in the year ending January 30, and recorded a net loss of $ 3.9 billion, compared with a profit of $ 564 million the previous year. . The company said it “anticipates 2021 as a year of recovery and reconstruction” after a better-than-expected holiday sales season, with momentum growing in the second half of the year. Fourth-quarter sales fell 19% from the previous year.
With more than 700 stores, Macy’s is often seen as a health barometer for US department stores, malls and consumers. On Tuesday, executives emphasized that Macy’s is building its digital business, which expects to reach $ 10 billion in sales over the next three years. It is leaving unfavorable American malls as part of the previously announced store closings and expanding its low-price chains like Macy’s Backstage, which aims to compete with TJ Maxx. And it is testing smaller stores called Market by Macy’s and Bloomie’s away from traditional shopping malls.
“We have a lot of customers who don’t want to go to a mall, or the best mall in town is not close to their home, so they go to lifestyle centers, strip centers, they go to stores,” said the chief executive of Macy, Jeff Gennette, in an interview on Tuesday. “Macy’s and Bloomingdale’s, in general, don’t play there, and that’s what we’re testing.”
Macy’s businesses have been heavily affected by the drop in clothing sales, as many occasions that require people to dress up simply did not occur during the pandemic. Gennette said that elegant clothing remained “very depressed” and that he did not anticipate a resurgence of such items until the fall, although the company had an “increase” strategy in place with suppliers to lean towards new stocks if they saw signs improvement sooner.
The New York-based company has been looking for “clues as to what’s going on with wedding dates, what’s going on with restaurant reservations, what are the signs that communities are starting to open up,” he said.
“I don’t think I see that in the summer,” said Gennette. “I hope it will be later, and it is something that we react to in the third or fourth quarter.”
He said clothes would play a less important role at Macy’s. The company said in its conference call that sales increased in areas such as household products, luxury skin products, fragrances and fine jewelry.
Even before the pandemic, Macy’s was under pressure. Last February, the company said it planned to close about 125 of its least productive stores in three years and cut about 2,000 corporate and support positions. Sales in 2019 fell to $ 24.6 billion from $ 25 billion a year earlier, and the company’s stock decline led to its withdrawal from the S&P 500 last year. The job cuts and stores were part of a three-year plan to return Macy’s to sustainable and profitable growth, called the Polaris strategy, in reference to its star logo.
Many consumers stayed away from malls and department stores last year and have substantially changed their spending habits in a newly isolated world. Macy’s place in American culture also suffered a blow, as the outbreak reduced its annual fireworks display and Thanksgiving Day parade in New York.
Outside of malls, Macy’s and Bloomingdale’s flagship stores in major cities have struggled heavily with the drop in pedestrian traffic from office workers and the loss of international tourists. Mr. Gennette noted that Macy’s was not demanding that its own corporate team return to the office until the fall and that, even then, it envisaged a “hybrid culture” for internal work.
The return of tourists is likely to come later, he said. “With our modeling, we don’t expect this to return until the end of 2021, but really, starting in 2022,” he said, adding that the company would continue to monitor signals such as advance reservations, airline tickets and hotel occupancy quotes.
Until tourists and workers return, he added, he expects stores in cities “to continue to be challenged”.