Macy’s officials are confident in their “A Bold New Chapter” strategy, highlighted by the company’s First 50 locations.
During its second-quarter earnings call Wednesday (Aug. 21), Macy’s Chairman and CEO Tony Spring noted the retailer showcased these flagship stores as a beacon of success amid a challenging retail environment.
“We’re excited about the First 50,” Spring said during the earnings call with analysts, emphasizing that these stores serve as an indicator of Macy’s future potential. “Confidence in our ‘Bold New Chapter’ is unwavering. We are seeing signs of our strategy taking root, including two consecutive quarters of positive comparable sales in Macy’s First 50 locations. We are encouraged by the early traction of our ‘Bold New Chapter’ and remain committed to returning Macy’s Inc. to sustainable profitable growth.”
Despite overall second-quarter sales falling 3.8%, to $4.9 billion, and comparable sales slipping 4%, the First 50 locations reported a 0.8% increase in comparable sales, marking two consecutive quarters of positive growth.
Macy’s First 50 is the overarching theme of its “A Bold New Chapter” strategy that aims to elevate its in-store experience and create a more seamless, omnichannel shopping journey. During the past year, Macy’s “tested and iterated various tactics in a small number of test stores, called our First 50, and we’re continuing to build on those learnings,” PJ Singh, vice president of stores strategy and product management at Macy’s, explained in an interview with PYMNTS posted earlier this month.
“The First 50 stores are a good representation of our nationwide, geographic footprint, and we have seen improved experience results supported by more colleagues on the floor, a more focused and stronger merchandising and visual representation, and more events in-store that are bringing animation and some retail theater to elevate the customer experience,” Singh told PYMNTS.
In an earnings press release Wednesday, Spring noted a “challenging consumer environment” marked by a more “discriminating” consumer, but he said on the call that he remains focused and optimistic about the First 50 strategy.
“The quarter played out softer than we expected,” he explained during the call. “In the First 50, all categories outperformed the rest of the nameplate. We have a model that we just need a little longer to learn from. As trends diverged, we did not stand still. We enhanced our promotions and delivered more targeted, personalized messages.”
The PYMNTS Intelligence report “New Reality Check: The Paycheck-to-Paycheck Report: The Pessimism About Pay Rises Offsets the Effect of Falling Inflation” found that 83% of consumers are concerned about current and near-future economic conditions. Twenty percent of paycheck-to-paycheck consumers said their average savings will decrease in 2024.
A separate PYMNTS Intelligence report, “Personalized Offers Are Powerful — but Too Often Off-Base,” found that 44% of consumers said personalized offers are relevant to their needs, and 89% of millennials said they are interested in receiving personalized offers.
According to a Macy’s earnings presentation Wednesday, plans for the First 50 include improving the customer experience with focused staffing in shoes, handbags, women’s ready-to-wear, fitting rooms and checkout. Macy’s officials also plan to enhance merchandising by editing existing assortments and adding new brands, modernizing visual presentations, and offering unique store-level activations and community events. They also will implement women’s shoes and handbag staffing tests in 100 additional “go-forward locations” in the fall.
“We will expand the First 50,” Spring explained during the call. “It’s a question of when, not if. I look at the First 50 continuing to be the best example of what Macy’s can be in the future. We are going to move as fast as we can without tripping on our way to success.”
Chief Financial Officer Adrian Mitchell added during the call, “We remain encouraged by our First 50 performance. The punch line is we’re not standing still. We’re leaning into the value orientation of today’s consumers. We’re activating stores with better presentation. Digital messaging is going out to customers to give them a reason to come back.”
Spring noted on the call that current and new customers are shopping in the First 50 stores, adding, “It shows us the work we’re doing is resonating with the consumer. Customer awareness is strong, and we’re only two quarters into a three-year plan.”
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