November 13, 2013, 3:05 PM

Macy’s tests store pickup of web orders

The test is going well and a national rollout is likely next year, Macy’s says.

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Macy’s Inc. is testing in-store pickup of online orders in a handful of stores in Washington, DC. Based on positive results so far, a national rollout is likely next year, chief financial officer Karen Hoguet told analysts today.

“It’s another way to get inventory to the customer in a way she likes,” Hoguet said in a conference call with analysts to discuss the retail chain’s third quarter financial results.

Hoguet touched at several points on the retailer’s “omnichannel” strategy of connecting stores and the web in a way that boosts sales. She pointed to the 500 Macy’s stores that now ship web orders to customers. That program lets those stores stock a fuller assortment, such as cashmere items in a broader range of colors, because some of that inventory will be delivered to web shoppers. “Our stores look better, and at the same time we’re satisfying Internet demand from that inventory,” Hoguet said.

She said most of the 800 Macy’s stores will be fulfilling online orders by next year.

Hoguet also called out Maison Jules, Macy’s new apparel line for twenty-something women, as being designed from the outset to leverage both stores and the web. As an example, hang tags on items in stores tell the shopper that a wider assortment of Maison Jules items is available at Macys.com, which is No. 12 in the 2013 Internet Retailer Top 500.

Macy’s changed its policy on reporting financial results this year, and no longer breaks out web sales. Company executives say separating web from stores sales does not accurately capture the way shoppers move back and forth between Macy’s stores and web sites.

Macy’s reported today that total sales in its fiscal third quarter, which ended Nov. 2, increased 3.3% to $6.276 billion from $6.075 billion. Analysts viewed that as a strong rebound from the 0.8% year-over-year decline in sales in the second quarter, and Macy’s share price shot up nearly 10% in stock marketing trading today.

Macy’s executives were also bullish about the holiday season, despite there being six fewer days between Thanksgiving and Christmas this year than last. The company projects an increase in comparable-store sales for the second half of the year of between 2.5% and 4.0%.

"Our success in the fourth quarter will be driven by a wide selection of exclusive products from the most-wanted brands and designers,” said Terry Lundgren, chairman, president and CEO. “We will bring them to our customers, whether they shop in our stores, online, via mobile—or all three.”

Macy’s also reported today:

  • Macy’s comparable-store sales were up 3.5% in the third quarter over the same period a year earlier, and 4.6% when including departments operated by outside companies, such as Finish Line and Sunglass Hut. Comparable-store sales include sales at the company’s e-commerce sites, Macys.com and Bloomingdales.com.
  • Third quarter operating income was $360 million, an increase of 10.8% from $325 million during the third quarter last year.

For the first three quarters of the fiscal year, Macy’s reported:

  • Total sales of $18.729 billion, an increase of 2.1% from $18.336 billion during the first three quarters of the previous fiscal year.
  • Comparable-store sales increased 2.2%, and 3.1% when counting sales from departments licensed to third parties.
  • Operating income of $1.329 billion, up 4.6% from $1.270 billion last year.

In moving to enable shoppers to pick up web orders in physical stores, Macy’s is following the lead of such other large retail chains as Wal-Mart Stores Inc., The Home Depot Inc. and Best Buy Co. However, it is not a service offered by such Macy’s rivals as The Neiman Marcus Group Inc. or Saks Inc.

Walmart.com is No. 4 in the Top 500, Best Buy No. 10, Saks Direct No. 37, Neiman Marcus No. 39 and Home Depot No. 46.

 

 

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