Before Thanksgiving and Christmas kicked off in 2024, Macy’s (M) flagged a major shift in consumer behavior.
The mall retailer, which owns its namesake stores along with Bloomingdale’s and Bluemercury, revealed in its third-quarter earnings report for 2024, that its total net sales decreased by 2.4% year over year. This decline contributed to Macy’s total revenue shrinking by almost 3%, compared to the same time period last year.
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During an earnings call on Dec. 12, Macy’s revealed that between August and November, it saw weaker sales in product categories such as men’s non-active apparel, handbags and home goods.
Related: Macy’s gives grim update about its future
Macy’s Chief Financial Officer Adrian Mitchell said sales were also negatively impacted by “unseasonably warmer weather” during that time.
“Cold weather is really coming online sequentially a bit later than what we had expected,” said Mitchell during the call.
Mitchell also revealed that Macy’s customers have become “very value-oriented” as the company saw increased sales of clearance items and positive responses to discounts. As a result of this shift of behavior, he warned that during the holiday season, the company will be navigating “a competitive discretionary environment.”
Macy’s issues stern warning about holiday sales performance
Now that the holiday season has come to an end, Macy’s has provided a grim update on its fourth-quarter sales performance, which will be unveiled in early March.
MINNEAPOLIS, MN, USA – AUGUST 8, 2021: Macy’s retail department store exterior and trademark logo.
The company warned that its comparable sales were roughly flat quarter-to-date as its “non-First 50 locations,” inclusive of “non-go-forward locations,” performed below expectations and generated negative comparable sales, according to a new press release.
Macy’s non-First 50 stores are 50 Macy’s locations that are used to test new ideas and operational strategies to see how customers respond them; the company’s go-forward locations are its most productive stores.
The company now expects its net sales during the fourth quarter to total “at, to slightly below, the low-end of the previously issued range of $7.8 billion to $8.0 billion.”
Shortly after Macy’s sounded the alarm on its recent sales performance, its stock price decreased by roughly 8%, now selling for about $14.56 per share.
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The revelation from Macy’s comes after a survey from the National Retail Federation last year predicted record consumer spending on gifts, food, decorations, and other seasonal items during the holiday season.
However, a report from online thrift store ThredUp last year found that consumers, on average, planned to purchase 7% less apparel at full price in 2024 than in 2023. Also, 55% of consumers said that if they don’t see an improvement in the economy, they’ll spend an increased proportion of their apparel budget on secondhand clothing in 2024.
Macy’s plans to shutter dozens of stores
Macy’s update on its recent sales performance also comes after it confirmed in a press release earlier this month that it plans to close 66 underperforming stores this year to help the company generate “sustainable, profitable sales growth.”
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“Closing any store is never easy, but as part of our Bold New Chapter strategy, we are closing underproductive Macy’s stores to allow us to focus our resources and prioritize investments in our go-forward stores, where customers are already responding positively to better product offerings and elevated service,” said Macy’s Chair and CEO Tony Spring in the Jan. 9 press release.
Macy’s announced its “Bold New Chapter” strategy in February 2024. The strategy aims to strengthen Macy’s nameplate, accelerate luxury growth and simplify and modernize end-to-end operations.
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