Takeaways from the 2017 Macy’s Investor Meeting

Executive Summary

At the 2017 Macy’s Investor Meeting, management outlined what it refers to as its “North Star strategy,” which consists of five points that will allow the company to emerge a winner and drive future growth. The company describes the five points as 1) From familiar to favorite, 2) It must be Macy’s, 3) Every experience matters, 4) Funding our future and 5) What’s new, what’s next.

• Management said that 9% of customers visit Macy’s 18 times per year and spend $2,010 per year, accounting for 86% of the company’s sales. The goal is to migrate customers from the second and third tiers to higher tiers by getting to know them using data and analytics and giving them what they want how they want it.
• Exclusive product at Macy’s comprises private brands, big brands and capsules. The goal is for exclusives to represent 40% of sales by 2020, up from 29% currently.
• Buy online, pickup in store has proven a successful combination of e-commerce and brick-and-mortar, and such transactions are the company’s most profitable. The service improves margins by cutting out shipping costs and increases sales, as customers tend to shop more when they get to the store to pick up their online orders.
• The company maintained its adjusted EPS guidance of $3.37–$3.62 for the year. Management noted that there could be risks to the gross margin rate, but that they should be offset by additional expense reduction opportunities (excluding asset gains) and asset sales.
• Macy’s has a substantial real estate portfolio encompassing more than 130 million square feet. The company’s real estate options include store closures, downsizing the box (reducing the footprint or selling off floors), development on excess land and “wrap and hug” development, such as developing restaurants attached to stores.