May 15, 2009, 12:00 AM

E-commerce technology takes project priority at Macy’s

Macy’s Inc. will invest more in e-commerce even before more bricks-and-mortar projects, CEO Terry Lundgren said in the company’s Q1 earnings call. Macy’s Q1 web sales rose 16% while total revenue and comparable-store sales fell 9.4% and 9%, respectively.

Katie Evans

Managing Editor, International Research

As the web continues to generate growth while comparable-store sales stagnate, Macy’s Inc. will invest more in its e-commerce channel before it looks to invest in bricks-and-mortar projects, CEO Terry Lundgren told Wall Street analysts on the company’s first quarter earnings call.

“Over time the new store sites and new mall construction sites are going to take longer to become a reality,” Lundgren said. “I have been very proud of our investment in technology, in our systems, which have been particularly focused in the last two years on merchandising and marketing initiatives, technology initiatives, and our investment in the dot-com infrastructure.”

Macy’s, No. 23 in the Internet Retailer Top 500 Guide, doesn’t break out specific quarterly web sales. But the web in the first quarter ended May 2 grew by 16.2% while total sales declined year over year by 9.4% to $5.20 billion from $5.74 billion and comparable-store sales decreased 9%. Macy’s net loss also widened by 49.1% to $88 million in Q1 2009 from $59 million in the prior year.

“A bright spot in our business is the Internet,” Lundgren told analysts. “We remain very excited by the possibilities for our direct-to-customer strategy and how it is becoming increasingly integrated with our stores.”

In the past several years, Macy’s has invested heavily in its e-commerce channel and its direct-to-consumer fulfillment capability. In 2007 Macy’s invested $100 million to upgrade e-commerce, order management and warehouse management. The company also opened another web fulfillment center in Arizona. “The fulfillment facilities over the last two years, the technology attached to those facilities and the web site itself have been an important investment and will continue to be,” Lundgren said.


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