Macy's Talks New Loyalty Program, Digital Gains and Weather Woes

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Credit: Macy's

Just in time for the holidays, a recently-unveiled marketing strategy and revamped loyalty program are both working well at Macy's, according to company executives discussing third-quarter earnings on Thursday.

CEO Jeff Gennette specifically called out marketing, where the company has refashioned its approach to be more targeted in messaging, as one of the "right steps" Macy's is taking.

Overall, however, results for the quarter were mixed at best. Net sales fell 6 percent to $5.3 billion and comparable sales were down 4 percent but earnings, at 23 cents a share, at least exceeded analysts' expectations. Macy's reiterated its full-year guidance and still expects comparable sales to fall between 2.2 percent and 3.3 percent.

The key takeaways are below:

Loyalty tipping the scales

Macy's new loyalty program, designed to strengthen relationships with existing customers and get them to spend more, rolled out Oct. 2. "Early results are promising," Gennette said on the earnings call. While the offering is only for card-members right now, it will expand to all customers next year.

Digital gaining ground

For the quarter, digital sales grew in the double-digits, the 33rd quarter in a row of such growth. Executives pointed to expanded delivery options, like same-day or buy-online, pickup in store, as helping to fuel the rise.

Weather woes

But unseasonably warm weather, along with the hurricanes, could have cost the chain potential sales. Chief Financial Officer Karen Hoguet said sales of cold-weather merchandise were $50 million lower than expected during the quarter; the hurricanes' impact was estimated at around $20 million in losses.

Tourists have yet to return

Like earlier this year, tourists are still shying away from shopping at big retailers including Macy's. Executives estimate the marketer's international tourist business was down 11.7 percent for the quarter, compared with a 9 percent decline in the second quarter.

Looking to 2018

Macy's is rethinking its approach to customer engagement, including the use of user-genreated content in the social space, Gennette noted. "Using our teams in a more relevant way to market in a more authentic way" is the goal, he said. The company is also experimenting with machine learning, image-recognition shopping and personalization.

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