Macy’s Inc will drastically change how it does business this holiday season, executives said on Wednesday, placing a sharper focus on its online business and selling more beauty and home items to shoppers opting to stay home due to the COVID-19 health crisis.
Shares of the largest U.S. department store operator rose more than 6% after it reported a smaller-than-expected quarterly loss and beat sales estimates as shoppers bought more activewear, shoes and handbags on its app and website amid the pandemic.
“Our immediate priority is successfully executing Holiday 2020,” Chief Executive Officer Jeff Gennette said.
The holiday season is the busiest time of the year for retailers, accounting for a huge chunk of annual sales. This year retailers are rolling out their earliest-ever holiday deals and promotions.
Gennette said nearly 50% of the company’s total gift assortment will be new, led by items in beauty and home, with products at every price point. Macy’s will also reimagine iconic events including the Thanksgiving Day Parade, local tree lightings and holiday window displays, the company said.
Recently announced holiday surcharges will lead to higher delivery expenses that will weigh on the holiday quarter, the company said.
To cope with the closure of malls and stores due to coronavirus-related lockdowns, Macy’s has been focusing on its online business, giving shoppers the option to buy online and collect from stores.
Though Macy’s sold more merchandise online, with digital sales surging 53% for the second quarter ended Aug. 1, the lower footfall in stores was not enough to make up for lost sales.
Macy’s, along with its department store rivals, depends heavily on tourists – particularly those traveling from overseas – to drive sales, especially at stores like its flagship Herald Square location in New York City.
Net sales fell 35.8% to $3.56 billion but beat analysts’ estimates of $3.48 billion, according to IBES data from Refinitiv.
On an adjusted basis, the company lost 81 cents per share, compared with estimates of a loss of $1.77 per share.
Net loss came in at $431 million, or $1.39 per share, in the quarter, compared with a profit of $86 million, or 28 cents per share, a year earlier.
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