New York – During the Yahoo Finance Invest conference this week, Tony Spring, the chairman and CEO of Macy’s Inc., sat down to discuss tariffs, customer sentiment, and store closures.
Using the banners of Macy’s, Bloomingdale’s, and Blue Mercury, Spring praised Macy’s Inc., calling it “a powerful engine of retail because we appeal to different types of consumers.”
Five main conclusions from the discussion on November 12 are listed below.
Tariff Outlook Still Hazy
This is not the first time that tariffs have been discussed. The Biden administration left some tariffs in place, and we have the experience from the first Trump administration.
He pointed out that the department store’s private brand products from China have already been broadened by Macy’s and its suppliers.
“We have constant discussions with our suppliers, manufacturers, and business partners to make sure they’re considering whether it would be beneficial to have things created outside of China. It will also be beneficial if you can at least balance production in another nation. Consider how [tariffs] also made South America and other Asian regions more accessible.
Spring said that it is still unclear how much the new Trump tariffs will cost and that the prospect of tariffs could be used as a negotiating tool in some situations.
There is, in my opinion, a difference between what people say and what they actually do. He added that he hopes the next administration will forgo further tariffs, saying, “We’re certainly all familiar with what campaign commitments are and then eventually what comes to pass.
“If it’s something substantial and significant, we’ll need to assess it.”
Should Retailers Pull Forward Receipts?
When the moderator asked if Spring and other members of the executive committee of the National Retail Federation were considering delaying item orders in order to avoid tariffs, he simply replied, “No.”
“Retail leaders need to be careful about how they manage their balance sheets,” he said. “They shouldn’t have inventory that they don’t need.”
Is Consumer Sentiment Improving?
“I believe that there has been a lot of uncertainty in 2024 due to a variety of circumstances. Retail is, in my opinion, a fantastic [location] for those who wish to celebrate and those who wish to get away after the election. In reality, we are a fantastic location for what we refer to as “retail therapy”—an opportunity for people to have fun.
Spring struck a more somber note later in the talk.
“Am I wary of the current situation? When I observe a customer being price-conscious, am I worried? Naturally. To be honest, though, that only makes us more determined to consider ways to encourage the buyer to make a purchase.
Macy’s Store Closing Plan is Firm – Mostly
Only two quarters into its three-year Bold New Chapter plan, Macy’s plans to close 150 of its shops by the end of 2026 and upgrade the 350 that remain.
According to Spring, “I don’t see a lot more [stores] closing than that – maybe a few less, depending on the performance.”
In contrast to “stores that were built 50 years ago in a particular suburb where people are no longer going,” he reaffirmed his support of retail establishments, adding that “they have to be good stores.”
After the second quarter ended, Macy’s increased the number of locations it intended to close to 55 from its initial goal of 50 in 2024.
Plans for Rolling Out “First 50” Store Enhancements Coming Soon
The “First 50,” a set of Macy’s department stores that have benefited from initiatives that improve the in-store experience, are exhibiting promise.
Almost all company families are seeing an increase in sales. Sales are surpassing those of the other Macy’s go-forward stores in sectors where business is worse. According to Spring, companies that had not previously sold Macy’s are now interested in doing so.
There is a slight increase in traffic, a slight improvement in conversion, and a slight improvement in average order value. We believe the arc improves with time. However, so far, so good.
The benefits of hiring more people in the “First 50” stores for shoes and handbags are so great that Macy’s has increased personnel in a few of its other locations.
“During its Q4 investor call, the company will announce plans for additional rollouts in early 2025,” he stated.
