The department store chain, Macy’s, has restructuring plans underway to boost its goal of saving $100 million annually and using that money for growth initiatives in 2019. With the restructuring, it plans to bring in some structural major changes but with a job cut.
But given the retail scenario today, Macy’s goals are not without challenges. With shoppers moving increasingly online, the Company’s 600 department stores across the U.S. need to justify their relevance. Some of Macy’s brands like Nike (NKE) and Coach have now opened standalone stores and at the same time have also ramped up their own websites.
Taking into account this current retail situation, Macy’s has decided to invest in five select areas in 2019. First is its Growth150 Plan where the company will further upgrade its more profitable stores with new lighting, fixtures and merchandise.
Second, focusing on Macy’s Backstage, the off-price business of the company that sells apparel and home goods at hefty discounts. Besides the already existing 120 Backstage locations, the Company plans to open 45 more this year as sales at Macy’s stores with Backstage shops inside are up 5%, on average.
Third, Macy’s will collaborate with its vendors more efficiently so that fresh and up-to-date goods arrive quicker in their stores.
Fourth, the Company will upgrade its app to further boost its online sales.
Finally, it will invest in the more profitable categories like dresses, fine jewelry, women’s footwear and beauty accessories.
The scope of the challenges Macy's faces, however, will not be fully addressed by just these upgrades. Its real estate is still the biggest challenge, and the company is now trying to find complementary uses of its some of its flagship locations, including the iconic Macy’s store in Herald Square in New York.
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The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
an operator of department stores
Industry DepartmentStores