Summary of Macy's, Inc. Conference Call Company Overview - Company: Macy's, Inc. (NYSE:M) - Event: JPMorgan 7th Annual Retail Round-Up Virtual Conference Call - Date: April 14, 2021 Key Points Industry and Market Position - The retail industry is experiencing a recovery as the pandemic subsides, with Macy's positioned to capture demand due to its flexible Polaris strategy [4][6] - Macy's is the second-largest online retailer in its categories, aiming for $10 billion in digital sales by 2023 [6] Consumer Behavior - There is a noticeable increase in consumer spending, particularly among core customers, with a 7% increase in average spend compared to 2019 [5][10] - New customer acquisition has increased by 19% compared to 2019, indicating a positive trend in customer engagement [5][12] Sales and Revenue Trends - Digital sales grew by 24% in 2020, with continued momentum into 2021, including a 75% increase in unique visits and an 8% increase in conversion rates [15][16] - The company is seeing strong performance in categories such as home goods, fine jewelry, fragrances, and luxury handbags [19][20][22] Inventory and Margin Management - Gross margins are improving due to better pricing analytics and inventory management, with a focus on reducing delivery expenses for digital orders [7][43] - The company aims for a gross margin of 37% in 2021, with expectations of lower margins in new categories like toys and home goods [48][53] Store Fleet Transformation - Macy's is closing underperforming stores while investing in remaining locations to enhance omnichannel experiences, including curbside pickup and faster service [38][39] - The company plans to open 45 new Backstage stores, reflecting a successful off-price strategy [26] Capital Allocation and Financial Health - Macy's ended 2020 with $1.7 billion in cash, providing flexibility for growth initiatives and debt reduction [61] - The company is focused on investing in digital supply chain improvements and technology to enhance competitiveness [63] Future Outlook - Macy's aims to return to pre-pandemic sales levels and achieve sustainable profitability through a digitally-led omnichannel strategy [67] - The company is optimistic about the recovery of apparel sales and the growth of new categories, expecting to maintain a healthy sales-to-stock ratio [55][68] Additional Insights - The Macy's Media Network is generating new income streams, contributing $35 million in 2020 and expected to reach $60 million in 2021 [59] - The company is committed to improving customer experience both online and in-store, focusing on younger demographics and enhancing product assortments [28][29] This summary encapsulates the key insights from the conference call, highlighting Macy's strategic positioning, consumer trends, financial health, and future outlook in the retail industry.
Macy's, Inc. (M) CEO Jeffrey Gennette Presents at JPMorgan 7th Annual Retail Round-Up Virtual Conference (Transcript)