Macy’s appears to be excelling in luxury retail as its high-end department store peers go under.
“Look at luxury right now, look at Neiman’s, look at parts of Lord & Taylor,” Macy’s Chief Executive Jeff Gennette told CNBC in a phone interview Wednesday, on the heels of the company’s second-quarter earnings report. “There is opportunity for us. Nordstrom is closing stores.”
“Bloomingdale’s is having a moment,” he said about Macy’s higher-end department store banner. “We have brands in our arsenal that we didn’t have before that are looking for additional distribution.”
Macy’s latest financial results surpassed analysts’ expectations, thanks in large part to a boost online. Digital sales were up 53% from a year earlier, as consumers visited Macy’s websites to stock up on jewelry, makeup, running sneakers and mattresses, the company said.
Macy’s shares were up less than 1% in afternoon trading.
Hit hard by the coronavirus pandemic, department stores have seen a fair share of turmoil this year. Neiman Marcus, J.C. Penney, Stage Stores and Lord & Taylor have each filed for bankruptcy protection during the Covid-19 crisis. Nordstrom is permanently closing 16 locations in 2020. Lord & Taylor, the oldest department store chain in the nation, is now set to liquidate its remaining 38 stores. Penney’s future is still uncertain as discussions with potential bidders have recently come to a stalemate, with the clock ticking for another plan to come through.
Gennette, though, says he sees $10 billion in market share up for grabs because of the shakeout in retail. Some of those dollars are coming from consumers who have more money in their pockets to spend, he said.
“Customers have got time on their hands. They can’t travel. They were budgeting for travel, and they want to reward themselves,” Gennette said.
That trend is helping to offset some sales the company has lost as international tourism came to a standstill.
Looking to build on the momentum Macy’s is currently seeing at Bloomingdale’s, the company is going to test a smaller-format Bloomingdale’s department store located away from the mall. That is slated to open later next year.
“It has to be tested, and it has to be proven,” Gennette said about the new space. “The customer is going to vote on this.”