Macy’s confronts struggles with new exclusive brands

New York – Messithe 165-year-old department store chain, is looking for ways to keep up with the new kids on the block.

The retailer is facing declining sales, and its stock has struggled in what has been a good year for the market. Now, it’s being treated to a wave of new and updated private label brands to entice shoppers, especially as some flee to popular consumer-facing brands, online giants like Shein and Amazonand big box operators such as Goal.

Related investment news

On Wednesday, she showed off her latest branding special, Day 34, at her flagship Macy’s Herald Square. The brand, named after the department store’s old location in Manhattan, is made up of women’s apparel and accessories. This brand is designed for women between the ages of 30 and 50 who want a look that is trendy, versatile, and easy to wear.

The new brand hits store shelves and the Macy’s website at a difficult time for the company and much of the retail industry. Consumers have reduced discretionary spending in stores because they are constrained by steeper grocery and rent bills, while spending on experiences like concerts and summer vacations. The department store operator cut its full-year forecast last month, after seeing consumers backtrack on purchases of clothing and other items.

The 34th is the first of four new private labels Macy’s plans to launch by the end of 2025. It also plans to update some existing labels and phase out others.

Macy’s Chief Merchandising Officer Nata Dvir said the company’s 34th appearance comes after more than two years of searching for clients.

“They cared about fit, quality and value and had a tremendous amount of passion about what they were putting on every day,” she said. And they deserved better.

The kick-off event previewed another part of Macy’s future, too: It was Tony Spring’s first public appearance, since he was named the next CEO. Spring, who currently leads parent company Bloomingdale’s high-end department store, will succeed Jeff Genet in February.

Genette said Wednesday that consumers’ financial pressures continue to show in the company’s sales trends.

Macy’s significantly lowered its financial forecast in June. The department store operator, which includes Bloomingdale’s and cosmetics chain Bluemercury, said it expects owned and licensed comparable sales to fall 6% to 7.5% for the year. It expects earnings per share of $2.70 to $3.20 for the year.

Macy’s shares reflected investor concerns. Macy’s stock is down more than 20% so far this year as of Wednesday. By comparison, the S&P 500 is up 19% this year.

Some of Wall Street’s concerns are specific to the company, as investors wonder if the vintage store can keep up with shoppers’ changing tastes.

Macy’s has sought to steady the ship in recent years while being battered by other rapidly changing dynamics. Led by Jennette, the department store began a three-year turnaround plan in February 2020, about a month before the start of the Covid pandemic. It advocated closing late stores, investing in its high-performance locations, and ramping up online growth.

Private labeling is a common way retailers offer exclusive, low-priced merchandise to customers. Labels tend to be more profitable, since the companies have direct control, fewer middlemen and volume when making the items. Plus, because the items can’t be found anywhere else, the retailer won’t go over price with a competitor.

Macy’s sells a mix of private label and national brands, including Ralph Lauren, Calvin Klein, and Levi Strauss. It has about 25 private label brands spanning categories such as apparel and home goods, including On 34.

In the most recent fiscal year, private labels accounted for about 16% of sales. However, Macy’s would like to get closer to about 20%, which is a level it has reached in the past.

But the strategy comes with risks. Target is the poster child for private label success, having hatched and expanded multiple multi-billion dollar brands including children’s apparel brand, Cat & Jack, and activewear brand, All in Motion. On the other hand, some investors have pinned the downfall of the now bankrupt Bed Bath & Beyond in part to its costly and aggressive offering of private brands that customers don’t want.

Janet said Maisie’s company was thoughtful about paying. She collects customer input while developing the apparel and even makes adjustments in final weeks while testing the brand with clients at two stores in New Jersey. In addition, he added, Macy’s has years of experience selling private labels with a following, such as women’s apparel brand INC and home goods brand Hotel Collection.

The company has acquired talent from retailers known for strong brands, too, including 23-year Target veteran Emily Erosha Hellic as senior vice president of private labels. It also named Brian Rivière, formerly of Gap-owned Banana Republic, Levi Strauss, Lululemon and Nike, as senior vice president of private label sourcing, product development and production.

Besides introducing a new look, Macy’s wanted to increase the quality and fit of its clothing. Over the past three years, it has reduced the number of factories and mills it works with About half, Rivière said. By working with fewer partners, it has the ability to negotiate better prices, savings to invest in better fabrics and knits and more to buy from the factories it works with.

I also worked with a technology company to standardize across all Macy’s brands. Erusha-Hilleque said global sizing makes shopping less of a guessing game for customers and products are less likely to be returned.

The 34th will officially debut in mid-August with about 750 items ranging from a basic tank top at $19.50 to a leather jacket at $299.50. Her shoe collection will be released in spring 2024.