For those of you travelling to New York City (NYC), the probability of visiting the Macy’s store on the 34th Street is in my opinion equivalent to that of going to Staten Island to see the Statue of Liberty.
Macy’ is the US’s largest department store chain and operates 850 department stores located in the United States, Hawaii, Puerto Rico, and Guam, with a prominent flagship store in NYC. The Company is also known for its Thanksgiving Day Parade in NYC which has been held since 1924.
The success of this Company is attributed mostly to its management team which from generation to generation strived to be a step ahead of its competitors; Macy’s often features new fashions and determines key trends making shopping exciting for consumers which leads to higher returns for shareholders.
Companies in this sector competing for market share include Dillard’s, JCPenney and Sears to name a few.
The Company’s growth journey remains guided by Macy’s core business strategies – My Macy’s localization, Omnichannel integration and Magic Selling – which are known by the acronym of M.O.M. Macy’s has introduced these steps in serving the customer better, faster, and with more charm.
My Macy’s localization focuses on having each store feature merchandise that is relevant to customers who live and shop in that area. The selection of fashion merchandise, as well as the taste level and sizing of the clothing, is often very different from store to store, and requires a trained staff.
The Omnichannel strategy refers to the ways orders can be fulfilled – from in-store, on-line or mail order customers. Management focuses on how the customer can receive a better service as purchases are delivered quicker than ever before.
Magic selling is the third key initiative. Through new training tools, staff is taught how to be more engaged with the customers and are empowered so that they can make decisions on the selling floor. It is an important step ensuring more caring and responsive customer service.
One thing is for certain – managements’ strategy is working. They have managed to improve operating margins and earnings year after year and we expect this positive trend to continue in the coming years. Improved economic growth forecasts for the US, increased disposable income (due to a lower price of oil) and lower unemployment are expected to contribute positively towards the retail sector.
Another positive for shareholders is that management has a reputation of constantly beating their own guidance. This increases an analyst’s conviction in the Company and in management’s projections.
My opinion is that Macy’s should continue to generate returns for shareholders in a sector which will benefit if the US economy continues to grow at an attractive rate.
This article was issued by Kristian Camenzuli, Investment Manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt . The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.