Macy’s has Yule visions of Martha, other celebs
CINCINNATI - Macy’s is turning to star power this holiday season to fight disappointing sales and resistance to its takeover of local department stores.
Macy’s launched star-packed ads featuring celebrities such as Donald Trump and R&B singer Usher, made changes in merchandise including exclusive alliances with well-known designer brands and returned to more promotions at some locations.
The changes aim to drive traffic and win over shoppers in some markets where the Macy’s name replaced local favorites it absorbed as part of acquiring May Department Stores in 2005.
“They’ve started in the right direction,” Wendy Liebmann, president of WSL Strategic Retail, said. “Now they have to deliver on the new message and the quality of their merchandise.”
Macy’s says its exclusive home-furnishings collection by Martha Stewart that debuted in September is off to a good start.
“There will be more Martha Stewart product in the stores for the holiday, and we’re optimistic about it,” Macy’s spokesman Jim Sluzewski said.
Macy’s recently announced deal to be the exclusive department-store retailer for the Tommy Hilfiger USA brand of men’s and women’s sportswear in the United States won’t begin until next fall, but the designer appears in TV ads.
“The plan is to draw more customers with exclusive alliances and then sell them their private labels as well,” said Patricia Edwards, managing director and a retail analyst with Wentworth, Hauser and Violich in Seattle.
Analysts say that while impending holiday sales aren’t a make-or-break situation, they need to show progress.
That may be a tall order in view of a slumping housing market and consumer worries over jobs and tight credit. The National Retail Federation is predicting the slowest growth rate for holiday sales in five years.
Rumors about Macy’s as a takeover target began in June and are not dead. Analysts don’t rule it out.
“If Christmas is very disappointing and the stock price goes down, then they may become more vulnerable to takeover efforts,” said Michael Appel, managing director of Quest Turnaround Advisors.
The Cincinnati-based retailer attributed a 77 percent drop in its second-quarter earnings to continuing costs from the $11 billion acquisition of May in 2005 and lower sales.
Macy’s said last week that same-store sales - stores open at least a year - were down 1.5 percent in October. That was worse than the 0.6 estimate from analysts.
The retailer is to report third-quarter earnings Wednesday. Analysts surveyed by Thomson Financial look for profit of 8 cents a share, after a loss due to the costs of the May acquisition on the same quarter of last year.
Former May customers haven’t responded as well as hoped to the September 2006 re-branding.
A year after Marshall Field’s and other May stores officially converted to the Macy’s nameplate, dozens of protesters gathered outside the Chicago store carrying “Macy’s Go Home” signs and urging a shopper boycott.
Macy’s has returned to providing more coupons at some former May locations, consistent with last Christmas’ levels, and is fine-tuning merchandise assortments.
Its holiday performance will be watched closely, even if sales are down throughout the industry, said Dan Hess, chief executive of research firm Merchant Forecast.
“If everyone else is doing poorly, they need to do less poorly,” he said.
Macy’s competition is broad-based, from discount chains like Target to moderate-priced retailers like J.C. Penney and luxury retailers like Seattle-based Nordstrom, depending on merchandise categories.
Retail analysts think Macy’s will have at least another year to show whether management’s strategies are working but note this is the second holiday season under the national brand.
“Certainly Wall Street, not to mention shoppers, are looking for something special out of Macy’s this season,” Liebmann said.