Macy’s announced plans to add a curated online marketplace to build on the company’s existing e-commerce business as it posted third-quarter financial results that exceeded expectations.
The new marketplace will significantly expand Macy’s assortment in existing categories and brands while also introducing a range of new product segments served by selected third-party merchants selling on both macys.com and bloomingdales.com, according to the company.
“The marketplace platform will further accelerate our Polaris strategy and unlock new opportunities for sustainable and profitable growth,” said Matt Baer, Macy’s chief digital and customer officer. “Our digital business is targeted to generate $10 billion in sales by 2023, and we expect the new marketplace platform to produce incremental revenue on top of that target. The marketplace platform will enable us to expand our assortment at a low incremental cost while giving Macy’s customers easy access to even more product selection.”
Macy’s has partnered with Mirakl, an enterprise marketplace technology company, to power its new marketplace platform. Mirakl seller tools will enable sellers to monitor, drive and grow their businesses within Macy’s curated parameters.
“The interplay between our digital and physical assets is more important than ever,” Gennette said, to the extent that Macy’s is looking to establish a footprint in markets where physical presence may be scarce but online sales have been gaining.
Macy’s expects the marketplace platform to launch in the second half of 2022.
Macy’s net income for the quarter was $239 million, or 76 cents per diluted share, versus a net loss of $91 million, or 29 cents per diluted share, in the year-earlier quarter. Adjusted for one-time events, net income was $386 million, or $1.23 per diluted share, versus a loss of $60 million, or 19 cents per diluted share, in the year-prior quarter, Macy’s stated. In the 2019 period, adjusted net income was $21 million, or seven cents per diluted share.
Macy’s beat a Yahoo Finance-published analyst consensus estimate for earnings per diluted share of 31 cents and sales of 5.2 billion.
Comparable sales at Macy’s banner stores gained 36.4% on an owned basis and 35.1% on an owned-plus-licensed basis versus the 2020 quarter, and comps increased 9% and 8.4%, respectively, versus the 2019 period. Bloomingdale’s comps on an owned basis gained 43.4% and 38.5% on an owned-plus-licensed basis versus the 2020 quarter, and the division’s comps increased 9.1% and 11.2%, respectively, versus the 2019 period.
Merchandise categories that proved solid throughout the COVID-19 pandemic, including home, fragrances, jewelry, watches and sleepwear, continued to see strong third-quarter sales performance, according to Macy’s.
Net sales were $5.44 billion versus $3.99 billion in the year-before quarter. Operating income was $523 million versus a net loss of $127 million in the year-previous period.
Digital sales increased 19% versus third quarter 2020 and 49% versus third quarter 2019, Macy’s indicated, and digital penetration was 33% of net sales, a five percentage point decline from third quarter 2020, but a 10 percentage point rise over third quarter 2019.
The company reported 4.4 million new customers shopped the Macy’s brand in the third quarter, a 28% increase compared with the 2019 period, with 41% of new customers coming through the digital channel.
In a conference call, Jeff Gennette, Macy’s chairman and CEO, said the company’s ability to tap resources flexibly and leverage relations, including those with international carriers, had helped it deal with logistical challenges so that “we don’t expect to be materially impacted by supply chain issues during the critical holiday shopping season.”
Gennette said the company’s loyalty program had seen additional engagement in the third quarter with the bronze level especially active, adding 2.3 million members in the period and seeing average spend up 13%. “Bronze is one of our best customer acquisition vehicles with approximately 35% of members under the age of 40 and 57% ethnically diverse,” he pointed out.
Genette noted that home merchandise was a particular sales driver at Bloomingdales.
Gennette said, “The results were driven by the effective execution of the Polaris strategy and an improved economic environment. In the quarter, the Macy’s brand added 4.4 million new customers. Consumers continue to spend, and we successfully offered a wide range of expanding merchandise assortment to meet their growing demand. Looking ahead to the fourth quarter, we remain a special place for holiday shopping, and our robust omnichannel ecosystem is showing resilience in the face of labor and supply chain challenges and enables us to meet customer shopping needs with speed and convenience. We are encouraged by the momentum of our business and its strong financial health and continue to invest in positioning our company for long-term sustainable and profitable growth.”
