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Marketplace

A look at Macy’s bottom line ahead of a new strategy

Annie Baxter May 13, 2015
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Macy’s reported disappointing earnings Wednesday morning, with sales down .7 percent from last year to $6.2 billion.

In an attempt to improve those numbers, the company will be trying a new growth strategy. This fall, it will open four discount stores in New York City called Macy’s Offstage.

Other big retailers like Saks Fifth Avenue, Nordstrom and Neiman Marcus have already established themselves in the discount game and are seeing good results from it.

“What is the hottest sector in apparel retailing in America? Off-price,” says retail consultant Howard Davidowitz. Davidowitz says with the middle class shrinking, it’s no wonder Macy’s now wants to open off-price stores. He thinks it’s slow to make the move, but has the chance to stand out against less upscale competitors.

“You can sell off-price, and it doesn’t have to be ugly,” he says.

But retail analyst Paul Swinand at Morningstar says discount apparel may already be saturated.

“In my opinion, it’s sort of skating to where the puck was,” he says. “I’m not so sure that off-price is going to continue its growth forever.”

Swinand says Macy’s should maybe lean harder on online sales, where it’s had a lot of success already.

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