Dive Brief:
- Macy’s net sales are falling at a time when the company plans to invest heavily in technology over the next three years. Net sales fell 6.8% year over year, according to the Q1 2023 earnings call for the period ending April 29. The retail company slashed its full-year guidance, citing consumer pressures.
- In March, during the Q4 2022 earnings call, executives laid out a capital spending plan to invest $1 billion in 2023 and up to $3 billion over the next three years, primarily focused on digital and technology projects.
- CEO and Chairman Jeff Gennette told analysts last week that a cost savings plan devised six months before had been accelerated. The retailer identified another $200 million of cost savings for 2023 and about $300 million to $350 million for 2024, and reduced this year’s CapEx budget by about $50 million, he said.
Dive Insight:
Though Macy's is reducing its CapEx projections, “the key thing to keep in mind is that we will continue to invest in growth, whether that be tech, whether that be people,” Adrian Mitchell, CFO and COO at Macy’s, said during the earnings call last week, according to a Seeking Alpha transcript.
Mitchell added chief operating officer to his title in March amid an executive shake-up at the company. In this role, Mitchell is responsible for stores, supply chain and technology.
“There are seams in-between those organizations; he's going to stitch that together,” Gennette, who is set to retire early next year, said of Mitchell during the J.P. Morgan retail round-up conference in March.
The company has also invested in data and analytics technology within stores, similar to some enterprise strategies for return to office.
“We've made a big investment in technology in stores to really understand … what their traffic patterns are when they come in,” Gennette said at the conference.
Macy’s has recently put a lot of its focus on the digital experience, redesigning the company’s website and enhancing its mobile app and strengthening omnichannel communications, Mitchell said at the conference in March.
Since assuming his new title, Mitchell has worked to understand how to further modernize Macy’s technology infrastructure to support the company’s omnichannel goals, Mitchell said during the earnings call last week.
“I've been on a listening tour, spending a lot more time in stores, [distribution centers] and with the technology team identifying areas of opportunity,” Mitchell said speaking during the Q1 2023 earnings call. “As I have been ramping up on these businesses, I've been highly encouraged to see stability in hiring, retention and turnover and have been impressed with the talent across these teams.”
As the company looks to rebound from a weak quarter, it will need to balance day-to-day needs with long term goals.
“I think what you're hearing from Tony, Jeff and I today is the importance of navigating the near term in terms of what's in front of us, but not losing sight and clarity about the long term,” Mitchell said during the earnings call.
