Macy's says its Polaris turnaround is 'working'
Declaring "The Polaris strategy is working," Macy's on Thursday reported second quarter net sales rose 58.7% year over year to $5.6 billion, just up from 2019. A rebound at stores hurt e-commerce, which fell 6% year over year but was up 45% compared to Q2 2019.
Digital sales were 32% of net sales, a 22-percentage point decline from a year ago, but a 10-percentage point increase compared to 2019. Year over year, comps rose 62.2% on an owned-plus-licensed basis; against 2019, comps rose 5.9% on an owned-plus-licensed basis.
The department store swung to a profit of $345 million, from its prior-year $431 million net loss, per a company press release. Gross margin expanded to 40.6% from 23.6% a year ago, and a 180-basis point expansion from 2019. Inventory was down 14.5% from two years ago.
Macy's is having a pretty good year so far. The department store is welcoming customers back to its stores after last year's pandemic-related lockdowns, health worries and economic anxiety, which scuttled its Polaris turnaround plans.
CEO Jeff Gennette on Thursday told analysts that Polaris is back on track. The company's off-price Backstage operation in store outperformed the full-line stores they're in, and comps at Backstage stand-alone locations were also up. Bloomingdale's "was strong online and in stores," and its Bluemercury spa business "showed a trend improvement versus the first quarter," he also said.
The department store has paid down $1.3 billion of the debt it incurred in order to stave off financial disaster last year. And as consumers continue shopping despite ongoing concerns about the pandemic, some 5 million Macy's shoppers are newcomers to its brand: the company reported a 30% increase in new customers compared to the same period in 2019, with 41% of them finding Macy's online.