December 9, 2008, 12:00 AM

The web shines for Macy’s in an otherwise dark year

At a time when Macy’s is struggling with declining total revenue and comparable store sales, web sales grew by 22.7% in Q3 and by 32% for the first three quarters, the retailer says. Direct sales are on track to reach $950 million in 2008.

Macy’s Inc. sees the future clearly and it’s the Internet.

At a time when Macy’s, No. 28 in the Internet Retailer Top 500 Guide, is struggling with declining total revenue and comparable store sales, its online sales grew by 22.7% in the third quarter, the retailer says. What’s more, after pumping $300 million into its direct market channel over the past several years, web sales are up by 32% for the first three quarters of 2008 and direct sales are on track to reach $950 million for the year.

The growth online is a bright spot in an otherwise tough year for Macy’s. In the third quarter total sales dropped year-over-year by 7% while comparable store sales declined by 6%. For the third quarter, Macy’s posted a net loss of $44 million on total revenue of $5.49 billion vs. net income of $33 million on sales of $5.9 billion in the prior year. For the first three quarters, sales declined year-over-year by 4.3% from $17.71 billion to $16.95 billion. Macy’s didn’t break out specific e-commerce numbers for its Q3 or year-to-date sales.

To attract more multi-channel shoppers, Macy’s has been busy updating its web sites with more advanced features and functions, says CEO Terry Lundgren. On Bloomingdales.com, the e-commerce site has recently been upgraded with speedier check-out, better images and regularly updated style guides. On Macys.com customers are using the site’s Find It In Store Application about 200,000 times each day to find particular products in a nearby store. Macy’s also is piloting web-enabled point-of-sale terminals in some Florida stores.

“We continue to find that customers who shop both our stores and our sites buy more than twice as much from us compared to those who shop either channel exclusively,” Lundgren says. “About 10% of shoppers who browse Macys.com to research a product ultimately will buy that specific item in a Macy`s store within 10 days.”

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