According to Jeff Gennette, fashion has come back to life at Macy’s Inc.
Denim is up at a meaningful level versus 2019, swimsuits are showing strength, dresses are surging now that proms are back on social calendars, sandals are trending and luggage sales indicate a renewed thirst to get back on the road.
“We’re very excited about what we’re seeing right now with the consumer and what’s going on in the macro environment,” Gennette, chief executive of the department store company, told investors Wednesday at at J.P.Morgan’s virtual 7th Annual Retail Round-Up conference.
Across the board, apparel sales and accessories are looking better than they have in quite some time. Luxury handbags from makers like LVMH, Chanel and Dior have done well, but watches and sunglasses are working, too. Sales of shorts and tees are picking up in addition to bathing suits. In footwear, sandals are taking off, with Birkenstock, Steve Madden and Michael Kors emerging as standouts, Gennette said. Levi’s is shining in the denim category, with encouraging numbers across men’s, women’s and kids. A rise in casual day dresses indicates that consumers are eager to venture out and resume their social lives.
Over the Easter holiday, “brands like Polo or Polo Ralph Lauren” were “fantastic,” Genette said, noting an uptick in interest around holiday-ready frocks for women, and sportswear for men.
Stimulus checks and rising vaccination rates haven’t hurt business, either—in fact, just the opposite. Plus, Gennette said Macy’s core customers are increasing their spending, while the number of new customers is up 19 percent over 2019. Macy’s, he added, has a sizable “opportunity” to grab market share, especially in digital, the channel that’s attracting new shoppers and will fuel the company’s path to “$10 billion by 2023.”
“We’re the No. 2 online site in the categories that we serve, and we’ve got ambition there,” Genette said, adding that rampant industry closures could benefit Macy’s Inc. To supercharge e-commerce, the company has invested in search relevance, personalization and the checkout experience, in addition to its pay-later partnership with Klarna.
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All of these investments have helped support improving fundamentals, Gennette said, citing robust gross margins powered in part by pricing analytics where the “stock-to-sales ratio is still really healthy.”
Roughly 38 percent of the 500,000 to 700,00 new Bronze members it adds each month are in the younger-than-40 millennial (and Gen Z) sweet spot, Gennette said, noting that loyalty members at this level stand at about 12 million, 13 percent higher than 2019’s tally.
Gennette expects that Macy’s Home Store will continue to see growth momentum as sales for furniture and home textiles see gains. Last year saw a rise in purchases in big ticket, tabletop, and soft home decor at a double-digit rate, he said, while fine jewelry and fragrance also remain strong selling categories.
Gennette also said the company will make do with “with leaner inventories” and carefully control receipts while preserving liquidity. He added that in terms of inventory allocation, the retailer is working on “making sure we get [the goods] in the right place at the right time for our customers,” as well as being much more attuned to ensuring regular price sell-throughs.
Gennette said Macy’s is adding 45 new off-price Backstage stores-within-stores in 2021, due to the strength of the business model. “We’re also now going back to adding freestanding Backstage stores that we started back in 2015,” he said.