Macys 2Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“We believe that much of our weakness is due to the health of the consumer and the fact that consumers seem to be choosing to make purchases in non-department store categories such as cars, housing and home improvement. Since we’re the first to report sales and earnings, it is frankly hard to judge how much of a role the economic conditions played, but we think it was significant.”

“Sales at Macy’s were disappointing in the quarter across the country, although less so in the Southern parts of the country and Hawaii, where weather was less of a factor.”

“What was more concerning, though, was the drop in the number of transactions, which is a proxy for traffic. This is in part why we decided to add to our marketing for the back half of the year.”

“Business in Center Core, especially handbags, continued very strong, as did key home categories, including furniture and mattresses. We also saw strength in key back-to-school categories, including kids and active, although juniors continued to be weak.”

“In addition to juniors, we had a tough quarter in shoes, driven by a weak sandals season. We are hoping for a strong boots season, which would improve our overall shoe trend this fall. Cosmetics, fragrances, jewelry and watches all softened in the second quarter relative to the first”

“Our guidance for the fall is to have comp sales in the 2.5% to 4% range. This would translate to an annual comp increase of 2% to 2.9%.”

“it was weak throughout the quarter. ”

“we are doing significantly better than we were doing in the second quarter in back-to-school, but frankly, across the country and across all the categories. So it really does feel like we’re onto a new trend. But again, 2.5 weeks does not make a season.”

[analyst comment] “Okay. You’re seeing value-conscious customers in a way?” [answer] “Correct. Correct”

“part of it is just that we may have moved away too far from some of the opening price points in women’s apparel. And so part of it just may be we’re finding our strategy in terms of key items”

“As we moved into the second quarter, we may have waited a bit too long to start marking down the warm weather goods. And I think some of the competition started doing so sooner than we did. That may have caused us to lose some sales in the quarter. I’m not sure. But frankly, as we looked back on the quarter, we were more concerned with things we did or didn’t do ourselves as opposed to what competitors were doing.”

“we looked at things, said, “Did we have too much reliance in the quarter on regular priced promotion? Should it have been more, what we call, demand promotion? Did we have too much fashion and not a lot of core seasonal merchandise? Did we have enough opening price product to fuel the second quarter? I mean, we went on and on and on, looking at all the things we felt we could do better. And we’ve made notes for next year in the second quarter and we immediately began fine-tuning our plans for the third and fourth quarter for this year.”

Macy’s 1Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“we transition our athletic footwear business to become a licensed department operated by Finish Line..we have also licensed some of our apparel and accessories space at Bloomingdale’s, and we have added licensed shops for a few luxury vendors here at Herald Square”

“we are no longer breaking out online sales because of the integration in our business between online and in-stores. The more we collaborate between our channels and utilize inventory across the company to satisfy customers, the more opportunities we are finding to improve our overall performance.”

“the store fulfillment has been a huge success and has allowed us to greatly increase the amount of online orders that we’re able to fulfill and satisfy customers. And it’s also enabling us to satisfy demand in stores as we do the Search & Send we’ve talked about, where we utilize store fulfillment to satisfy orders in different stores. So it is a huge success, and is for sure helping fuel the sales growth we’re seeing.”

“Our merchants are constantly forecasting and re-forecasting the business, and making sure we’re taking the markdowns we need to keep the right age of inventory. Because the key to running a retailer is keeping the flow of fresh receipts. So if you’re not maintaining the right inventory level, you get backed up, particularly in periods like we’ve seen with the unseasonably cold weather. So I think our merchants have done a terrific job managing the inventories and keeping fresh goods coming into the stores.”

“where we don’t think we can get the best product for our customers, a license deal like Finish Line makes a huge amount of sense. If you think about it, they have access to shoes that we couldn’t get as Macy’s”

“Bloomingdale’s did have a challenging quarter. I can’t speak to the question specifically that you asked. In part, because Bloomingdale’s is a more contemporary fashion retail, they have been hurt more by the general weakness in the feminine apparel area. I think also the fashion today is quite a bit younger, which may be less appealing to the broader Bloomingdale’s customer. That may be a piece of it. So again, we’re not sure, but they did have a more challenging quarter. On the other end of the spectrum, we are seeing some weakness amongst our more budget-conscious, what we call deal-hunting customers.”

“by the way, sometimes the customers change. If we look at the number of stores that are Latino-influenced, it’s growing significantly since we started 4 years ago.”