Of all the stores in all the country, Macy’s is the one that remains front and center in the great battle of retailing. While the ultimate demise of other major brands—no names, please—are pretty much foregone conclusions, the country’s leading department store chain is still a work in progress as it tries to adapt to the new realities of retailing.
So it was big news earlier this week that the company had shown its first quarterly profit in more than a year—very welcome indeed to its investors, employees and suppliers.
It was especially gratifying for those on the home side of the business. The company reported that its home furnishings category continues to outperform the store overall, combining with its luxury, beauty and fine jewelry departments to produce the improved results. The retailer’s sales for 2020 plummeted 29 percent, and it posted a net loss of $3.9 billion for the year. The fourth-quarter boost offered encouragement for retailers who still get the bulk of their sales from physical stores.
As with many other retailers at the moment, sales of products for the home have been standouts. “We expect the home business is going to stay strong and elevated,” Macy’s chairman and CEO Jeff Gennette said on the company’s conference call with analysts on February 23. He cited home textiles, home office and outdoor furniture as top performers, and noted that the brand’s consumer-direct model has been especially successful for home merchandise.
While the Macy’s and Bloomingdale’s online units were early e-commerce adopters and are among the stronger efforts from legacy retailers, they still seem to be taking a back seat to the stores. For Macy’s to succeed, it, of course, must continue to build out its online business. To that end, Gennette said the goal would be to achieve $10 billion in e-commerce sales. With overall revenue falling to $17.3 billion last year, that would represent more than half of the company’s sales—a major leap from the previous quarter, when home accounted for 44 percent of sales.
The strength in home mirrors what’s happening elsewhere in department stores and retailing at large. In announcing disappointing overall numbers for its fourth quarter and fiscal year earlier this week, Dillard’s, too, cited home and furniture as top performers during the last two quarters. Home Depot and Lowe’s also registered solid comp store sales this week, and the overall home remodeling and redecorating trend continues to excel.
Macy’s said it doesn’t expect its business—still largely driven by apparel and fashion categories—to fully return until late in 2021 or into 2022. “I don’t think I see it for the summer,” Gennette added.
Until then, the home category continues to cover the company’s bottom … line.
Homepage image: Macy’s in Herald Square, New York | Courtesy of Macy’s
Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.