Macy’s (M) Goldman Sachs 31st Annual Global Retailing Conference summary

Recent performance and consumer trends

• Gross margin and expense control exceeded expectations, but sales lagged due to a more discerning consumer, which is now reflected in the outlook for the rest of the year.

• Performance improved since mid-Q2, with stronger consistency through Labor Day, attributed to marketing, inventory adjustments, and focusing on successful categories.

• The First 50 stores showed comp growth and outperformed other locations, serving as a leading indicator for the brand.

• Store closures increased to 55 for the year, with efforts to retain customers digitally and in nearby stores.

• Luxury banners remain resilient, with accessible luxury offerings and loyal customer bases, though some luxury categories are softer.

Strategic plan and operational initiatives

• The three-year "Bold New Chapter" plan focuses on customer experience, profitable sales growth, and operational rigor.

• Key strategies include enhancing the in-store experience, shedding underperforming stores, and improving operational productivity.

• 2024 is positioned as a transition and investment year, with plans to expand Bloomingdale's and Bluemercury by about 20%.

• Digital business and luxury market expansion are growth vectors, with automation and outsourcing driving cost efficiencies.

• Capital allocation is disciplined, with CapEx reduced by $100 million year-over-year and a focus on working capital optimization.

First 50 stores initiative

• Investments in contemporary brands, improved staffing, and visual presentation have driven better traffic and conversion.

• Enhanced staffing in key areas like women's shoes led to outperformance in those categories.

• Localization and micro-targeted marketing are used to engage local communities and drive store visits.

• Early results show sequential sales acceleration and improved conversion, with plans to expand these changes to 100 more stores.

• Operational efficiencies outside the store support the overall business economics.