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A Bright Future for Macy’s?
Macy’s announced a 5.5% increase in same-store sales for the 1st quarter and a profit of $23 million vs a loss of $88 million for the same period last year. This is a positive sign in and of itself, but there are further reasons to like the future for the mammoth retailer. They are now generating 40% of their revenue from private and proprietary brands. With upcoming and recent deals with Madonna, Sean Jean, Rachel Roy and Columbia Sportswear and with an aggressive effort to continue to add to that strategy, it is clear that the percentage of exclusive labels will be a greater share of the total in the future. The advantage of selling product that their competition doesn’t carry is multifold; greater margins, more control, less markdown pressure, distinguishing from the competition. This bodes well for their margins in the near future.
Additionally, there are plans that will increase the revenue that Bloomingdale’s contributes to sales, currently running at 10% of the company’s total. It was announced Bloomingdale’s will roll out a smaller 100,000 sq ft format, ala the Soho store, with a store opening in Santa Monica this summer. It was already announced that they are opening the first of 4 outlet stores this summer, which is a new venture for the chain.
Lastly, it looks like Macy’s has put behind it all of the loose ends and chaos and confusion from both the messy marriage with May Co and the closing and consolidating of all of their non New York corporate offices around the country. It is business as usual in Herald Square and full steam ahead.
Surprising Warts for Walmart RetailSails has heard several surprising negative issues regarding Walmart’s practices recently in addition to whisperings of some internal tension. One is a further narrowing of its vendor base, with some key long-time suppliers told they will be no longer be doing business with the retailer. This is not a real shock as Walmart has a history of walking away from vendors in an effort to narrow their supply base and do larger volume with the remaining companies.
Also,there was a change in its quality assurance policy, which some of their domestic importers believe is bordering on onerous. We have heard from several sources that this policy might force some suppliers to no longer be interested in doing business with them. Intentional? Who knows. One vendor we spoke to thinks it is part of a plan to have Li & Fung (which signed a deal to be a primary production source) pick up larger percent of the manufacturing. On that note though we have heard that Li & Fung is not hitting the price points that Walmart is looking to achieve.
All of these changes have contributed to us hearing from several sources that a sizeable part of the NY staff is unhappy and actively seeking employment elsewhere. Stay tuned.
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