Macy’s Inc. is a large retail company with department stores familiar to many consumers, such as Macy’s and Bloomingdale’s. Currently, it is increasing investment spending by $100 million to gain more international exposure, create bargain versions of its department stores and hopefully spark some sales growth after lackluster results for the past four years. Karen Hoguet, the company’s CFO, said that the new expenditures will likely take two to three years to implement. Her main focus is to spend in order to stimulate growth that can be seen with a greater profit margin.
As a whole, Macy’s has done relatively well in regard to the retail segment as consumers continue to shop less and less at malls and turn to online retailers. As stated in Suzanne Kapner’s article in The Wall Street Journal, Macy’s also has to compete with changing consumer taste, as buyers are more willing to spend on cars and electronics as opposed to apparel and accessories. The company has recently had a minor management shift as it brought in two new executives who would foster a greater emphasis on growth tactics.
Macy’s Inc. also recently acquired a beauty and skin-care chain, Bluemercury Inc., for just over $200 million, making it the company’s first acquisition in over 10 years. Macy’s Inc. is not alone in its effort to create growth and expansion. Nordstrom, a high-end department store, has also bought online retail sites Hautelook and Trunk Club. In 2015 alone, Macy’s Inc. will spend $1.2 billion in order to supply its investments efforts. Some of that money, however, will come from company layoffs of around 2,000 workers, which is expected to save the company about $140 million in expenses.
Macy’s Inc. is part of the consumer goods and services sector. In the past year, the sector has underperformed in the S&P, growing 11.75 percent in comparison with 12.10 percent. This sector is of particular interest, as some competitors have managed to survive and grow in the years following the country’s recession while others have fallen greatly behind. In the past year, Macy’s Inc.’s stock has also increased over 18 percent in market price, with competitors Kohl’s and Nordstrom increasing over 35 percent. On the other hand, companies like Sears and JCPenney have not faired so well. Over the past year, the price of Sears’ stock has decreased just over eightpercent. If one looks at the growth of JCPenney’s stock over the past year it has increased 50 percent, but that is only due to its increasingly low stock price. The company as a whole is in major financial turmoil, and it is racking up more debt as the days go on, with a profit margin in the negatives.
It will be interesting to see if Macy’s Inc.’s bold investment maneuvers pay off in the long run. The consumer goods and services sector is closely trailing the S&P, and smart management decisions can help to further increase the company’s stock price and make it a leader in its sector. The retail industry is becoming increasingly difficult to succeed in with the growing presence of online retailers, but while some continue to appeal to consumers, others like JCPenney may be soon facing bankruptcy.