Even as Macy’s shutters stores and struggles against online retail giant Amazon, Macy’s stock has recently performed about as well as Amazon’s stock.
Macy’s shares increased by 50 percent, making it a top-ten stock in the S&P 500 this year, CNN reports. The company’s steady stock climb can’t be attributed to just one single cause.
Taking a page from Amazon, the traditional brick-and-mortar retailer started to cater more to customers who would shop online instead of staying stuck in a pre-internet mentality. This change can be attributed to the new direction in which current CEO Jeff Gennette took the company. He replaced Terry Lundgren last year, a man who became CEO during the height of the more recent Iraq War and has been in the retail business for decades. The change in leadership and direction has so far paid off with digital sales recently growing at a rapid pace.
Investments the company company still makes in its Bluemercury chain and Macy’s Backstage have helped increase the stock price as well.
Another reason for the Macy’s turnaround: The company has started to close underperforming stores and has sold off some of its real estate holdings. That helped cut costs and boost profits.
Moody’s put out a report this week about department stores and specifically cited Macy’s as a company that may be able to hold its own against larger retail rivals.
A Moody’s report came out last week that went into detail about ways department stores could compete with companies like Amazon. The analysts highlighted how Macy’s allows shoppers to buy online and then pickup in the store and makes sure to put a strong emphasis on the program and its efficiency and ease of use. The more hidden reason why this tactic is so clever is because once the shoppers come into the store to pick up the items they purchased online, they tend to buy more things while at the store, something which Amazon can’t do outside its very limited bookstores.
According to CNN, Moody’s said that both Macy’s and Kohl’s are the only department stores that allow people to “check prices on its app, track order history, do visual searches for products and also chat with customer representatives.”
“Retail companies that embrace innovation can survive in the age of Amazon,” Matt Schreiber, president and chief investment strategist at WBI Investments, told CNN in an email.
“Macy’s is making a comeback by revising its business model to better integrate e-commerce and brick-and-mortar,” Schreiber said.
Morgan Stanley employee and analyst Kimberly Greenberger believes that Wall Street has given Macy’s some beginner’s gains and that the coming quarters will really test the company’s, and retail sector’s, long-term sustainability.
“Even though Macy’s is closing stores proactively, it may not be doing so quickly enough,” she said.
By: James Harland