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Macy's (M) Poised on Flourishing Digital Wing, Polaris Strategy

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Macy's, Inc. M, one of the nation’s premier omni-channel retailers, has been triumphant on the back of efficient operating strategies and investments to enhance digital capabilities. This Zacks Rank #1 (Strong Buy) company’s efforts undertaken as part of the Polaris Strategy, which includes rationalizing store base, revamping assortments as well as managing costs prudently, are encouraging. Such upsides coupled with improving economic trends due to easing of pandemic-restrictions keeps Macy’s well-placed for growth in the forthcoming periods. Let’s delve deeper.

Digital is the Way to Go

Macy’s digital platform is among its key growth catalysts. During first-quarter fiscal 2021, the company’s digital sales surged 34% from the year-ago quarter’s figure and contributed 37% to net sales. Management highlighted that 47% of new customers acquired during the quarter came from the digital channel. Additionally, 82% of the digital orders came from repeat customers. Mobile devices contributed nearly 60% to digital demand sales. Stores also played a vital role in the fulfillment of online sales. Nearly 22% of online sales were generated from stores, including curbside pickup and same-day delivery.

Management continues to focus on extending the availability of online assortments and expanding omni-channel capabilities. Its tie up with DoorDash for expediting delivery service is yielding. It also collaborated with Sweden-based buy-now, pay-later group — Klarna — for offering financial ease and payment flexibility to customers. The company is constantly improving its mobile and website features to enhance shopping experience. Expanding digital capabilities is a vital component of the company’s Polaris Growth Strategy. The company anticipates online sales to reach nearly $10 billion by fiscal 2023.

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Polaris Strategy & Other Growth Efforts

Macy's is progressing well with its three-year Polaris strategy, which focuses on strengthening customer relationships, expanding assortments, accelerating digital growth, optimizing store portfolio and reducing costs. In respect to cost management, the company expects that the Polaris strategy will help it attain gross savings of nearly $2.1 billion by 2022. Additionally, the company is on track with expanding brand offerings across price points. Apart from these, the company is committed toward boosting supply chain infrastructure. It also strives to drive value across product categories and boost merchandise margins by adopting effective pricing as well as reduced promotions.

The company’s expanded Star Rewards Loyalty program, which was initiated in 2018, is driving customer engagement. Macy’s is also evaluating its store portfolio and is on track with plans to shutter stores in lower tier malls that are least productive, while upgrading the rest.

The aforementioned growth efforts along with an encouraging view for fiscal 2021 bode well for the stock. Shares of the company have surged 42.6% in the past six months compared with the industry’s rise of 49%.

Here are 3 Key Stocks for You

Dollar General Corporation DG, flaunting a Zacks Rank #1, has a long-term earnings growth rate of 11.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Target Corporation TGT, also sporting a Zacks Rank #1, has a long-term earnings growth rate of 13.3%.

Costco Wholesale Corporation COST has a long-term earnings growth rate of 9.1%. It currently carries a Zacks Rank #2 (Buy).


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