Mobile sales double for Macy’s in fiscal 2015
February 23, 2016 04:37 PM
Consumers bought more online and less in stores from Macy’s Inc. in the department store’s latest fiscal year, which ended Jan. 30.
Mobile commerce was a particular highlight, chief financial officer Karen Hoguet told analysts Tuesday during a conference call to discuss the retailer’s fourth quarter and full-year earnings.
“Mobile is a major priority for the company,” she said, according to a transcript from Seeking Alpha. “Sales on mobile devices more than doubled in 2015, fueled by large increases in both traffic and also conversion. It is the fastest-growing digital channel.”
As for e-commerce overall, it was “another year of double-digit growth in our online business, fueled by exceptional increases in mobile traffic and increased conversions, with exciting new offerings from Macys.com and Bloomingdales.com,” CEO Terry Lundgren said in a statement accompanying the earnings release. Macy’s owns Bloomingdale’s.
Macy’s, No. 7 in the Internet Retailer 2015 Top 500, did not provide any more detail on its mobile or web sales. The company in recent years has stopped breaking out web sales, saying that its increasingly “omnichannel” customers regularly move back and forth between stores, so that it’s hard to allocate credit for a sale to a single channel.
In a nod to that shopping behavior, the largest growth in investment this year will be in digital initiatives and better serving consumers who shop both online and in stores, Hoguet told analysts. “There's a lot of investment being made in digital growth, which, by the way, is not all digital sales,” she said. “Part of that is omnichannel investments, so the customers can easily go back and forth between stores and the Internet.”
Those investments will include improving Macy’s mobile commerce site and mobile app, such as by adding additional navigational filters so mobile shoppers can more easily find what they need, she said. She said Macy’s is considering a variety of ways to provide more information to mobile shoppers, such as product reviews and “natural language search,” a technology designed to grasp a consumer’s intent when she types in a search query.
Hoguet took issue with an analyst’s suggestion that strong e-commerce growth might cut into the retailer’s profit margin.
“There's a misperception that digital growth comes at a lower margin,” she said. “That's not really the case.” She noted that Macy’s fulfills online orders in a variety of ways, including from stores and warehouses, and by allowing customers to pick up web orders in stores. “But that is not a negative drag on our margins as we go forward. We love digital growth.”
Some other retailers, including Nordstrom Inc. in its earnings call last week, have said that online orders produce lower profits than store purchases, in part because of the cost of delivering orders to consumers’ homes.
Lundgren also noted in his statement that Macy’s had opened another e-commerce fulfillment center in 2015, this one in Tulsa, Okla. Macy’s operates a total of eight direct-to-consumer distribution centers.
Double-digit online growth is not a surprise for Macy’s. Even as they claim they can’t distinguish web from store sales, Macy’s executives consistently report double-digit percentage growth in online revenue. The retailer’s web sales grew 30.1% to $5.4 billion in 2014 from $4.15 billion, according to an estimate by Top500Guide.com.
However, a doubling of mobile sales would indicate that more Macy’s shoppers are buying via smartphones and tablets than in the past. While Macy’s does not disclose its mobile sales, the retailer is estimated to have booked $790 million in mobile sales in 2014, a 75.6% from $450 million a year earlier, according to Internet Retailer’s Mobile 500, which ranks global retailers by mobile sales.
Despite the e-commerce growth, total sales for Macy’s declined 5.3% during its fiscal fourth quarter and 3.7% for the 12-month period. The company closed 40 stores last year and opened 26 new ones.
Hoguet said Macy’s anticipates progress in the coming year from several initiatives launched last year. Apart from digital projects, they include a new focus on upscale jewelry, the launch of its Backstage off-price stores, a “top door” strategy designed to drive traffic to its 150 strongest bricks-and-mortar locations, and the acquisition of cosmetics retailer Bluemercury. Nonetheless, Hoguet projected that total sales for Macy’s would decline 2% in the current fiscal year and comp-store sales, including e-commerce, would fall 1%.
For the fourth quarter of its 2015 fiscal year ended Jan. 30, Macy’s reported:
- Sales of $8.869 billion, a decline of 5.3% from $9.364 billion in the same quarter a year earlier.
- Net income of $543 million, down 31.5% from $793 million.
For the 2015 fiscal year ended Jan. 30, Macy’s reported:
- Sales of $27.079 billion, down 3.7% from $28.105 billion a year earlier.
- Net income of $1.070 billion, a decrease of 29.9% from $1.526 billion.