Will Bloomingdale’s grab hold of the luxury products market?
Timing, as the saying goes, is everything, and Jeff Gennette, CEO of Macy’s, Inc., thinks that there has never been a better time for Bloomingdale’s to shine.
In an interview with CNBC, Mr. Gennette said that Bloomingdale’s is well-positioned to grow sales and market share at a time when competitors in the luxury department store space are declaring bankruptcy (Lord & Taylor and Neiman Marcus) or struggling (Nordstrom) in the face of the novel coronavirus pandemic.
Macy’s CEO told CNBC that he believes that there is $10 billion in market share waiting to be taken and the recent strength they’re seeing in Bloomingdale’s sales is a precursor of what’s yet to come.
Speaking yesterday on his company’s second-quarter earnings call, Mr. Gennette said Bloomingdale’s “is benefiting from the current move away from spending on experiences toward spending on products, especially within luxury. From textile to shoes, to handbags, to mattresses, to diamonds, luxury proved to be strong across almost every category of the Bloomingdale’s business, significantly growing its penetration of the business year-over-year. Given our strength in this area, we are leaning harder into luxury in order to capitalize on the shift in spending.”
Mr. Gennette and company are also interested to see how well Bloomingdale’s fares with its first smaller, non-mall store, which is expected to open in the fourth quarter of 2021. Macy’s CEO expressed confidence in Bloomingdale’s chances while giving a vote of confidence for stores in A-list malls, which he expects will continue to “thrive.”
Luxury may be Bloomingdale’s niche, but Mr. Gennette also sees opportunities for the retail brand to play up the value angle with its Bloomingdale’s The Outlet stores. Macy’s CEO said that profitability in its off-price units (Macy’s Backstage and Bloomingdale’s The Outlet) is continuing to improve.
Macy’s, Inc. reported that second-quarter revenues were $3.6 billion across its business units, up from $3 billion in the previous quarter, as it began reopening stores shuttered earlier in the year due to the coronavirus outbreak. The department store operator posted an adjusted loss per share of 81 cents in the most recent quarter.
- Macy’s, Inc. Reports Second Quarter 2020 Results – Macy’s, Inc.
- Macy’s, Inc. (M) CEO Jeff Gennette on Q2 2020 Results (Earnings Call Transcript) – Seeking Alpha
- Macy’s CEO sees huge opportunity in luxury retail as other chains go bankrupt – CNBC
- Macy’s Posts $431 Million Loss as Stores Continue Recovery – The Wall Street Journal
DISCUSSION QUESTIONS: Do you agree that struggling competitors and the shift in consumer spending away from experiences have worked in Bloomingdale’s favor? Do you think the chain will be able to capitalize on the $10 billion market opportunity highlighted by Jeff Gennette?