What: Macy's executives show great optimism during J.P. Morgan presentation.

Why is it important: Jeff Gennette, chairman and CEO of Macy’s said the department store “fundamentals” continue to improve, including margins through improved pricing analytics. There’s greater full-price selling, faster turnover, a healthy stock-to-sales ratio, a lower SG&A rate, and expense discipline. Genette cited an influx of new customers — 7 million in the fourth quarter — and an opportunity to capture market share, particularly in digital, to get to USD 10 billion by 2023.

Currently, compared to 2019, Macy’s sees the rate of increase in new customers at about 14% ahead, and that the company is spending 8% more. Digital remains very strong: it was up 24% in 2020 and accelerating in the first quarter of 2021. The company has been working on search relevancy, improving personalisation, simplifying pricing, promotions, the checkout experience, and providing new payments options, including Klarna.

Gennette stressed that Macy’s is selling more with less inventory, that regular price sell-through is up and average unit retail price is up about 7% this quarter versus the same period in 2019.

Macy’s store fleet transformation activities are focused on rightsizing the number of stores, making omnichannel investments in remaining stores, testing the potential productivity and profitability of smaller off-mall formats (Market by Macy’s, Backstage and Bloomingdale’s the Outlet) and monetising real estate assets wherever possible. Last year, Macy’s said it would close 125 “neighborhood” doors, and now has about 60 locations left to close.

With Backstage, Macy’s also growing off-price business, 45 in-store departments are planned this year, and there’s a resumption of opening freestanding Backstage stores. A handful opened for the first time in 2015.

To improve margins on digital sales, Macy’s has been developing ways to encourage store pickups to save on delivery costs, reducing the number of packages per order, and linking the best shipping offers more directly to the loyalty program and Macy’s proprietary credit card to reward bigger spenders.

Macy’s Inc. Sees a Brighter Light in a World of Uncertainty