NEW YORK—Macy’s Inc. turned in a strong third quarter performance— proof, its executives said, of the strength of its Polaris omnichannel strategy which leaves the retailer positioned for long-term, sustainable growth.
Earnings exceeded expectations, outperforming 2020 and 2019, with continued topline sales growth and gross margin improvement, CEO Jeff Gennette told investors on a conference call this morning. It was the second quarter in a row that sales were above 2019 levels.
Sales were driven, Gennette noted, by an improved economic environment and the effective execution of the company’s Polaris strategy, which focuses accelerated digital growth, cost reductions, an optimized store portfolio and other metrics.
Sales were strong in suburban markets but less so in downtown stores, which were impacted by a drop in international tourism and fewer office workers.
Gennette also said the company is well positioned for the holiday season with solid inventory levels and good internal supply chain management. It has adjusted freight strategies, diversified ports and is working closely with international carriers and vendor partners to mitigate disruption.
Overall net sales for the quarter ended Oct. 30, 2021 were $5.4 billion, compared to $3.9 billion in the year-ago period, and $5.1 billion in the same time period in 2019. Home helped drive sales for the retailer, along with handbags, jewelry and other categories.
Comparable sales were up 37.2% on an owned basis and up 35.6% on an owned-plus-licensed basis versus 2020; up 8.9% and up 8.7%, respectively, versus 2019. The shift of the Friend and Family promotion into the third quarter this year boosted October sales compared to 2019.
Digital sales increased 19% versus third quarter 2020 and grew 49% versus third quarter 2019.
Net income for the quarter was $239 million, compared to a loss of $91 million in the year-ago period.
From a brand standpoint, Macy’s comp sales were up 36.4% on an owned basis and up 35.1% on an owned-plus-licensed basis compared to the third quarter of 2020, and up 9% and 8.4%, respectively, compared to the third quarter of 2019. The nameplate added 4.4 million new customers in the quarter.
Bloomingdale’s comparable sales on an owned basis were up 43.4% and on an owned-plus-licensed basis were up 38.5% compared to the third quarter of 2020, and up 9.1% and 11.2%, respectively, compared to the third quarter of 2019.
The company touted its digital sales strength. It launched several initiatives in the quarter including a refreshed mobile app, live shopping functionality and a 3D room planning expansion.
It also announced the launch of a curated digital marketplace in the second half of next year that will feature third-party merchants. The new platform will expand its assortment in existing categories and introduce new categories, the company said. Mirakl, an enterprise marketplace technology company, will power the platform.
Macy’s digital business is benefitting from a shift of sales from stores but is growing beyond that, an executive said. They noted that digital business is strongest where it has brick-and-mortar stores.
It opened five off-mall, small-format test stores in the Dallas, Atlanta and Washington, D.C. markets during the quarter and is seeing a strong sales response there, executive said. These smaller formats allow the company to study and reposition its brick & mortar assets to support its omnichannel efforts.
Macy’s is also delaying the planned closure of certain stores in order to maintain a physical presence in certain markets and to help adjust to the off-mall format.