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Macy's (M) Gains on Strong Digital Wing, the Polaris Strategy

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With the easing of pandemic-led norms and outdoor movement picking up pace, shopping trends for apparel products have normalized. Such aspects are favoring the well-known omni-channel retailer, Macy's, Inc. (M - Free Report) . The company is witnessing favorable customer response across its merchandise offerings. Investments made toward enhancing digital capabilities have 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 have aided the company’s second-quarter fiscal 2021 results, with the top and the bottom line improving year on year.

Shares of this Zacks Rank #1 (Strong Buy) company have gained 19.2% in the past three months compared with the industry‘s rise of 1%. Let’s take a closer look at the aspects driving the company.

Digital Wing Adds Charm

Macy’s online platform is a feather on its cap. The company’s digital sales are being supported by expanded omni-channel offerings like curbside, store pickup and same-day delivery. During second-quarter fiscal 2021, it 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 — to offer 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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The Polaris Strategy & Other 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 along with 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.

The aforementioned growth efforts and improving economic trends keep Macy’s well-placed for growth in the forthcoming periods. The company is preparing for the upcoming festive season with prudent hiring plans. It is hiring 76,000 full- and part-time employees, offering competitive packages and bonuses.

3 Retail Picks to Adorn Your Portfolio

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) , sporting a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 12.3%.

Kohl’s Corporation (KSS - Free Report) , also with a Zacks Rank #1, delivered an earnings surprise of 102.2% in the trailing four quarters, on average.


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