Macy’s execs share inside scoop on buying plans, consumer sentiment

2022.09.22

During this morning’s Q2 investor call, executives said the Macy’s banner continues to mark down slow-moving and aging goods, including home textiles. It expects to enter 2023 with inventories balanced at the appropriate levels.

Within the group of hard-hit categories that were top performers during the pandemic – soft home, activewear, casual sportswear and sleepwear – demand is down about 24%. Supply has now also been lowered by roughly 24%, “so we’re able to get those in stasis,” said Jeff Gennette, chairman and CEO of Macy’s Inc.

Aggregate Q2 sales for that group of products tumbled 18% compared to the year-ago quarter and were also down 12% compared to the second quarter of 2019.

5 quick takeaways from the call:

Buying plans: Macy’s still sees risk in the industry-wide glut of categories whose sales boomed during the pandemic. It is examining inventory levels by category, by brand and by channel. But it is also focused on flowing newness. More 55% of offerings for holiday will be new, up more than 30 percentage points from last year, when merchandise was constrained by supply chain backlogs.

Consumer sentiment: Customers across all income tiers slowed and shifted their spend at Macy’s during the second quarter. Although sales were solid for Mother’s Day and Father’s Day categories, the trend fell progressively thereafter.

Trade-down shoppers: They haven’t shown up at any of Macy’s Inc.’s banners, at least not yet.

The Macy’s shopper: The sales slowdown was evenly spread between the over-40 and under-40 age groups. However, Gold and Platinum loyalty members continued to spend consistently, while Silver and Bronze members pulled back.

The Bloomingdale’s shopper: Luxury customers are trucking right along, especially those with incomes of $150,000 and up. Bloomies had the best comp gain for the quarter, up 5.8%, and the active customer count rose 14%. Top categories were women’s, men’s, kids’ contemporary, dressy apparel and luggage.

The company is positioning itself to be profitably competitive in a sharply promotional back half. It expects most consumers to remain under pressure financially.

“Wage growth not keeping pace with inflation, which is putting pressure on savings rates,” said Adrian Mitchell, Macy’s Inc. CFO. “The consumer is not as healthy as they were in prior quarters.”