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Macy's (M) North Carolina's Fulfillment Unit to Aid Supply Chain

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Macy's Inc. (M - Free Report) continues to deepen its focus on growing as a digitally-led omnichannel retailer and executing its Polaris Strategy. The strategy mainly aims at strengthening customer relationships, expanding assortments, accelerating digital growth, optimizing store portfolio and reducing costs. In recent developments, management shared plans of opening a fulfillment center in China Grove, NC, in 2024 to cater efficiently to burgeoning omni-channel demand. Around $584 million is expected to be invested in the project.

The latest fulfillment center launch is a key milestone for Macy’s and connects well with its Polaris strategy. After being fully functional, this fulfillment center will account for about 30% of M’s digital supply-chain capability, serving customers all across the nation. This 1.4-million-square-foot facility will offer jobs to approximately 2,800 workers on being completely operational.

The facility, equipped with the direct-to-consumer automation technology, is expected to boost productivity to bolster digital sales. This latest automation feature will have an advanced goods-to-person and a pocket sorter system, which will modernize Macy’s supply chain by moving merchandise with higher speed and accuracy. Hence, this new facility will reinforce M’s omni-channel ecosystem and drive higher sales.

Macy’s also invested in automated technology in the Portland, TN, and Martinsburg, WV, distribution centers. Management had earlier shared plans to expand operations from its present Houston, TX, distribution center into an advanced new facility in Tomball, TX, in sync with the Polaris strategy. Located at 14000 Boudreaux Road, this one-million-square-foot distribution facility is planned to be built into a new industrial development alongside Lovett Industrial and Clarion Partners. Expected to be completed in mid-2023, the facility will support stores in the region and offer online fulfillment in peak season for furniture, bedding and toys.

More on Strategies

Apart from enhancing its supply-chain operations and fulfillment centers, Macy’s has been undertaking various initiatives for a while to deliver customers a seamless shopping experience. M continued to enhance its digital offerings, including a redesigned mobile app, live shopping functionality and the addition of payment options, such as Apple Pay, Klarna Express Checkout, PayPal and Venmo.

Additionally, Macy’s tie-up with DoorDash for expediting delivery service appears encouraging. M also announced the launch of a digital marketplace to strengthen its omni-channel retailing capabilities. To power the platform, M partnered with Mirakl, a leading enterprise marketplace technology company. The platform is expected to be launched in the second half of 2022.

During the fourth quarter of fiscal 2021, digital sales increased 12% from the prior fiscal year’s quarterly level and 36% from fourth-quarter fiscal 2019 reading. Digital penetration was 39% of net sales in the quarter under review. M’s digital business is on track to generate $10 billion of sales by fiscal 2023, while the new digital marketplace platform is expected to produce incremental revenues on top of that target. This currently Zacks Rank #3 (Hold) player’s shares have increased 29.6% in the past year, outperforming the industry’s 5.6% growth.

Key Picks in Retail

Some better-ranked stocks are Capri Holdings (CPRI - Free Report) , Boot Barn Holdings (BOOT - Free Report) and Tapestry (TPR - Free Report) .

Capri Holdings, which offers accessories and footwear, has a Zacks Rank #2 (Buy) at present. CPRI has an expected earnings per share (EPS) growth rate of 53.9% for three-five years. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Capri Holdings’ current financial-year EPS suggests growth of 215.8% from the year-ago corresponding figure. CPRI has a trailing four-quarter earnings surprise of 1,018.2%, on average.

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, presently has a Zacks Rank of 2. BOOT has an expected EPS growth rate of 20% for three-five years.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and EPS suggests growth of 62.6% and 220.8%, respectively, from the year-ago corresponding figures. BOOT has a trailing four-quarter earnings surprise of 47.1%, on average.

Tapestry, a renowned designer of fine accessories, presently carries a Zacks Rank #2. TPR has a trailing four-quarter earnings surprise of 28.2%, on average.

The Zacks Consensus Estimate for Tapestry’s current-year sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the corresponding year-ago levels. TPR has an expected EPS growth rate of 10% for three-five years.