Macy's reported better than expected numbers for July with same-store sales up 7.3 percent and total dollars up 11 percent for the period. For the year-to-date, Macy's same-store sales are up 5.2 percent and, overall, the retailer has a year-over-year gain of 7.2 percent.
"Our strong sales performance in July and the second quarter resulted from the continued evolution of our core Macy's strategies, including My Macy's localization and centralization of the organization. We also are benefiting from the continued strength at Bloomingdale's, which will open its newest store tomorrow in Santa Monica, CA," said Terry Lundgren, chairman, president and chief executive officer of Macy's, Inc., in a statement.
A Wall Street Journal article suggested that Macy's numbers improvement may be due to it having gotten away to a degree from its "upmarket image," putting it in a position to steal market share from rivals such as J.C. Penney.
Charles Grom, an analyst with J.P. Morgan, told the Journal that Macy's continues to be more expensive than Penney, but has introduced more moderately priced items in the past year.
Mr. Lundgren pointed to exclusive brands as a reason for optimism.
"We have planned for a successful back-to-school season and it is off to a great start with the phenomenal launch this week of Madonna's new Material Girl juniors brand," said Mr. Lundgren. "We also are launching our exclusive brand for young men, Slade Wilder, and the early response has been very strong."
Macy's has also benefited this year from greater integration of its store and online channels.
"Our Search & Send capability has now been rolled out to every Macy's store nationally and is helping us to capture new sales opportunities in every location by accessing online inventories," said Mr. Lundgren.
Online sales for macys.com and bloomingdales.com were up 28.1 percent in the second quarter and 31.0 percent for the first six months of 2010. Online has given the company a 0.8 percent boost for its same-store numbers this year.
Discussion Questions: What is your assessment of Macy's at this point and time? What initiatives have impressed you most and where do you think the company continues to face challenges?