Macy’s sales plummeted in 2020, highlighting the pandemic’s toll on retail

Macy’s, the retailer that also owns Bloomingdale’s and Bluemercury, said Tuesday that its sales last year plummeted 29 percent, highlighting the toll the pandemic has taken on mall chains and uncertainty about how it will play out. it will regain traditional retail in a post-pandemic world.

Macy’s said sales fell to $ 17.3 billion in the year ended January 30, and that it posted a net loss of $ 3.9 billion, compared with a profit of $ 564 million the prior year. The company said it “anticipates 2021 as a year of recovery and rebuilding” after a better-than-expected holiday sales season, with a boost in the second half of the year. Fourth quarter sales were down 19 percent from a year earlier.

With more than 700 stores, Macy’s is often considered a barometer of the health of American department stores, malls and consumers. On Tuesday, executives emphasized that Macy’s was building its digital business, which it expects to reach $ 10 billion in sales in the next three years. It is moving out of unfavorable American malls as part of previously announced store closings and expanding its cut-price chains like Macy’s Backstage, which aims to compete with TJ Maxx. And it’s trying smaller stores called Market by Macy’s and Bloomie’s away from traditional malls.

“We have a lot of clients who don’t want to go to a mall, or the best mall in that city is not near their home, so they go to lifestyle centers, strip centers, they go to the media,” said the director. Macy’s executive Jeff Gennette in an interview Tuesday. “Macy’s and Bloomingdale’s, in general, don’t play there, and that’s what we are testing.”

Macy’s business has been hit hard by the drop in clothing sales, as many occasions when people dressed up just didn’t happen during the pandemic. Mr. Gennette said that elegant clothing was still “very depressed” and that he did not anticipate a resurgence of such items until the fall, although the company had an “increase” strategy in place with suppliers to lean toward new inventory if see signs of improvement sooner.

The New York-based company has been looking for “clues as to what is happening with wedding dates, what is happening with restaurant reservations, what are the signs that communities are starting to open up.” , He said.

“I don’t think I’ll see it for the summer,” Gennette said. “I hope it’s later, and it’s something we react to in the third or fourth quarter.”

He said clothing would play less of a role at Macy’s. The company said in its results call that sales had increased in areas such as household goods, luxury skincare, fragrances and fine jewelry.

Even before the pandemic, Macy’s was under pressure. Last February, the company said it planned to close about 125 of its least productive stores over three years and cut about 2,000 positions in corporate and support functions. Sales in 2019 had fallen to $ 24.6 billion from $ 25 billion a year earlier, and the decline in the company’s stock led to its removal from the S&P 500 last year. The job and store cuts were part of a three-year plan to return Macy’s to sustainable and profitable growth, called its Polaris strategy, in reference to its flagship logo.

Many consumers stayed away from shopping malls and department stores over the past year and substantially changed their spending habits in a recently isolated world. Macy’s place in American culture was also affected, as the outbreak reduced its annual fireworks display and Thanksgiving Day parade in New York.

Outside of shopping malls, Macy’s and Bloomingdale’s flagship stores in major cities have struggled enormously with declining office worker foot traffic, as well as the loss of international tourists. Mr. Gennette noted that Macy’s did not require its own corporate staff to return to the office until the fall, and that even then, it anticipated a “hybrid culture” for office work.

The return of tourists is likely to come later, he said. “With our model, we don’t expect it to return until the end of 2021, but actually, starting in 2022,” he said, adding that the company will continue to monitor signals such as early bookings, airfare and hotel occupancy. rates.

Until tourists and workers return, he added, he expects stores in cities “to continue to face challenges.”

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