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Macy's (M) Benefits From Polaris Strategy, Digital Offerings

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Consumers are increasingly shopping for apparel and accessories as pandemic-led restrictions ease and socialization comes back into the picture. Leading omni-channel retailer, Macy's, Inc. (M - Free Report) , has been gaining from consumers’ favorable response toward brand offerings across its categories. Investments made to enhance digital capabilities have also been yielding. 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 aided the company when it reported second-quarter fiscal 2021 results, wherein the top and the bottom line improved year on year

Shares of the company have gained 17.6% in the past three months compared with the industry’s rise of 9.1%. Let’s delve into some of the key aspects aiding this Zacks Rank #1 (Strong Buy) company’s performance

Digital Wing Looks Strong

Macy’s digital platform is among its key growth catalysts. Digital sales are being supported by expanded omni-channel offerings such as curbside, store pickup and same-day delivery. In second-quarter fiscal 2021, the company acquired 5 million new customers, up 30% from fiscal 2019’s tally. Of the new customers acquired, 41% came through the digital channel. Management is on track to strengthen its omni-channel capabilities with investments toward online shopping experiences, data and analytics, technology infrastructure as well as better fulfillment 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 online customers. The company is constantly improving its mobile and website features to enhance shopping experience.

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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. With respect to cost management, the company expects that the Polaris strategy will help it attain gross savings of nearly $2.1 billion by 2022. 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. During second-quarter fiscal 2021, the company witnessed Platinum, Gold and Silver customers re-engage in the Star Rewards Loyalty program. 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. It is also on track with expanding its off-mall presence to support omni-channel growth.

Wrapping Up

The aforementioned efforts and improving economic trends keep Macy’s well-placed for growth in the forthcoming periods. Management has provided an encouraging view for fiscal 2021. The company expects net sales in the bracket of $23.55-$23.95 billion, which suggests an increase from $17.35 billion reported in the year-ago period. Adjusted earnings are anticipated in the range of $3.41-$3.75 per share, which calls for an improvement from a loss of $2.21 in the prior-year period.

Here are 3 Key Stocks for You

Abercrombie & Fitch Co. (ANF - Free Report) , flaunting a Zacks Rank #1, has a long-term earnings growth rate of 18%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Tapestry, Inc. (TPR - Free Report) , with a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 11.7%.

Casey’s General Stores, Inc. (CASY - Free Report) , also carrying a Zacks Rank #2, delivered an earnings surprise of 26.1% in the trailing four quarters, on average.

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