A Blog by Jonathan Low


May 22, 2021

Macy's Store Sales Jump 56 Percent, Indicating Retail Shopping Resurgence

Traffic and sales are jumping at Macy's around the country, including its premier Bloomingdales stores. 

This is good news for retail and for the economy but the looming question going forward is whether the big surge is just a reflection of pent-up demand after 18 months of pandemic isolation or a longer term trend indicating a renewed appreciation for in-store shopping. JL 

Sapna Maheshwari reports in the New York Times:

“As vaccination rates climbed and customers became more comfortable emerging from their pandemic behavior, we saw a real pickup in store traffic - and once they were in stores, they responded with purchases. We think this is momentum that has not peaked yet." Macy’s has hundreds of stores around the country, and its results often help paint a picture of American consumer habits and the health of malls.

A combination of government stimulus and faster-than-expected vaccinations drove a sales rebound at Macy’s over the past three months, in what could signal the start of a post-pandemic shopping boom.

Macy’s said on Tuesday that sales jumped 56 percent in its first quarter, which ended May 1, from the same period last year, when the start of the pandemic pulverized the retailer’s revenue. It raised its sales and profit forecast for the year.

The company, which also owns Bloomingdale’s, reported $4.7 billion in sales and a profit of $103 million. That compares with about $3 billion in sales and a loss of $3.6 billion in the same period last year.

“As the vaccination rates climbed and customers became more and more comfortable, kind of emerging from their pandemic behavior, we definitely saw it in a real pickup in store traffic — and then once they were in stores, how they responded with their purchases.
He added, “We don’t think this is a small-term bump or pop. We think this is momentum that has not peaked yet. “Vaccinations were faster than expected,” Jeff Gennette, the chief executive of Macy’s, said in an interview on Tuesday. t and is going to continue to play out through our business in 2021 and then to 2022 and beyond.”

The retailer said it anticipated sales of $21.7 billion to $22.2 billion this year, up from a previous forecast of $19.8 billion to $20.8 billion.

Macy’s is part of a larger group of retailers that have reported higher sales in the first few months of 2021, though its results stand apart because of its focus on apparel and other discretionary items.

On Tuesday, Walmart said its sales in the United States in its first quarter, which ended April 30, increased 6 percent to $93.2 billion, while operating profit grew about 27 percent to $5.5 billion. Walmart’s earnings were strengthened by its e-commerce sales, which increased 37 percent in the first quarter. On an earnings call, the company also pointed to strong “reopening categories, such as travel, celebration and personal care.”

Retail sales were flat last month after a buoyant March, the Commerce Department said on Friday, suggesting an uneven recovery for the overall industry. Macy’s said on Tuesday that customers were starting to attend events again after a year of isolation and were snapping up dresses for proms, casual get-togethers and weddings. Men’s tailored clothing, travel and swimwear have also seen increases. Traffic is improving at Macy’s flagship stores, which lost visitors in the past year, though the company said it did not expect international tourism, which can account for 3 to 4 percent of business at Macy’s and Bloomingdale’s, to recover until 2022.

“Dresses, luggage or men’s clothing — those are all areas that have really been kind of dormant categories for us in 2020,” Mr. Gennette said. “They’ve really kicked in during the first quarter of 2021, and they were just getting stronger as the quarter progressed.”

Macy’s, which is based in New York, said it was still seeing strong sales in pandemic-friendly categories like home goods.

Macy’s has hundreds of stores around the country, and its results often help paint a picture of American consumer habits and the health of malls. Department stores, which have already been under intense pressure in recent years, were battered by the pandemic as consumers postponed gatherings, worked from home and avoided enclosed spaces. Neiman Marcus and J.C. Penney filed for bankruptcy and restructured their operations during the crisis, closing numerous stores and culling their staff.

Online shopping, which has grown significantly at Macy’s, could not fully replace the typical productivity of its more than 500 locations, where people are, in normal times, encouraged to browse, touch products and visit fitting rooms. The company said it expected store traffic to increase as customers, particularly older ones, continue to get comfortable with in-person shopping again.

Macy’s, which has been closing stores in certain markets for years now, still believes that the divide between America’s best malls and those that are teetering will continue to grow in coming years.

“I don’t think that dynamic that we walked into the pandemic with has changed fundamentally,” Mr. Gennette said. Still, he added, “coming out of it, I do think that there is a real role for stores in our business.

The strong results from Macy’s was a positive sign for the retail sector, which has been hammered by plunging sales and store closures in the last year. But the company’s first-quarter sales were still down about 15 percent from $5.5 billion in the same period of 2019. Macy’s was under strain even before the pandemic, and its declining share price last year led to its removal from the S&P 500. Mr. Gennette said that he believed that Macy’s could return to its 2019 sales levels but did not share a timeline for when that might occur.

In an interview earlier this year, Mr. Gennette had been hesitant about calling a return of wedding dates and restaurant reservations in the summer.

Macy’s recently proposed the construction of a commercial office tower on top of its flagship Herald Square store in New York. The company said on the call on Tuesday that it expected the project would produce a “significant” amount of cash to support its future plans.

Mr. Gennette declined to comment on whether Macy’s would make money by leasing the proposed office space or selling the building, though he noted that the company had been working on the project for about four years and had “a vision for it.


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