The leaders of Macy’s Inc.’s three retail banners — Macy’s, Bloomingdale’s and Bluemercury — took the stage together on Sunday, Jan. 13 at the NRF Big Show in NYC, offering a rare opportunity to hear from all three brands in unison, particularly as the company continues to face activist pressure.
Tony Spring, Chairman and CEO of Macy’s Inc., Bloomingdale’s CEO Olivier Bron and Bluemercury CEO Maly Berstein discussed their individual businesses, as well as the company’s larger turnaround effort, currently underway.
Here are some of the big questions about the company’s strategy and future that were answered:
- How’s the turnaround going?
- Should Macy’s Inc. spin off Bloomingdale’s and/or Bluemercury?
- Would it be easier to be a private company?
- Is it time to give up on the department store?
- Does the rise of ‘dupe culture’ pose a threat to Bloomingdale’s and luxury in general?
- Will the new administration’s policies on immigration and tariffs cause problems?
How’s the Turnaround Going?
The company’s Bold New Chapter turnaround strategy was first introduced in early 2024, around the same time that Spring was appointed Chairman and CEO. Spring described the plan as “an opportunity to reimagine the Macy’s Inc. portfolio,” and said he’s pleased with the early results and plans to stay the course, despite some ongoing pushback from the shareholder peanut gallery. As the biggest indicator of the strategy’s success, Spring pointed to comparable sales growth at the First 50 stores (the first 50 Macy’s stores slated by the company for improvements).
“We picked 50 stores and said, ‘Let’s focus on those 50 stores,’” Spring recounted. “Let’s up our game in terms of merchandise assortment. Let’s change the presentation on the floor in terms of density of product. Let’s put people back into the fitting rooms to make sure the service experience is better. We’ve seen three consecutive quarters of improvement in our net promoter scores, in addition to three consecutive quarters of comp store sales growth [at these 50 stores].
“We’re also trying to make sure that our operations are taking advantage of today’s technology,” Spring added. “Whether that’s the algorithmic side of where to fulfill products from so that we have fewer split shipments, or making sure that we are putting the right depth, size and color basis from a geography between digital and physical so that we don’t take as many markdowns because we put the wrong product in the wrong place at the wrong time.”
Similar rejuvenation efforts also are underway at Bloomingdale’s and Bluemercury, both of which have entered this transition period on stronger footing than the company’s nameplate banner. For example, Spring pointed out that Bluemercury has seen 15 consecutive quarters of comp store sales growth, but that hasn’t stopped the chain from launching a rebrand designed to “clarify and reinforce” its position in luxury beauty, said Berstein. Similarly, Bloomingdale’s has its own “Dream Bigger” transformation strategy underway that is focused on “pushing the boundaries” of customer and brand experience, according to Bron.
Should Macy’s Inc. Spin off Bloomingdale’s and/or Bluemercury?
Most recently, Macy’s has found itself being pushed to spin off its higher-performing business units (Bloomingdale’s and/or Bluemercury) by its latest activist investor because, as moderator Courtney Reagan of CNBC put it, these brands’ “value is not being recognized in the share price.”
“The first part of your statement is right, we’re not getting the recognition for the value of these two brands,” said Spring in response, before again rejecting the idea of a spinoff. “We continue to believe that there are synergies that are leveraged between the three brands, between warehousing, legal, finance, back-end operations, joint brand negotiation,” he said. “There’s just so much opportunity for us to leverage the scale of the portfolio.”
Without naming names, he then acknowledged recent moves by Macy’s department store compatriots, which are facing similarly challenging market conditions — that is, the Nordstrom family striking a deal to take their namesake chain private, and Saks Global finally succeeding in acquiring fellow luxury chain Neiman Marcus.
“If you look at other companies deciding they don’t want to be in the public market or they want to join together with others because they need to be bigger to be successful, we also need that strength of combined value,” Spring said. “But we also will distinguish and make sure that neither of these brands becomes one another. The key is for the customer to find something special and different at Macy’s, Bloomingdale’s and Bluemercury. At the same time [we need] to continue to try to make the case to the public markets that this three-brand portfolio has more value than we are showing today.”
Would it be Easier to be a Private Company?
In light of the recent Nordstrom deal, it’s a fair question as to whether it would be easier to conduct the kind of transformation Macy’s Inc. needs out of the public eye, but Spring quickly quashed that idea, saying “I don’t think that the choices are difficult. We have decided to close up to 150 stores. We’re going to close a number of stores this year; we announced 66 earlier this week. We’ve doubled down on Bloomingdale’s and Bluemercury as growth engines as a part of our luxury sector. We’ve decided our store experience can and should be better if we have a smaller portfolio within the Macy’s brand. I don’t think it’s a question of public or private; it’s a question of do we have a focused number of priorities?”
Is it Time to Give up on the Department Store?
Perhaps not surprisingly, both Spring and Bron’s response to this idea was a firm “no.”
“The death of department stores has been going on since I was a child, and I’m not that young anymore; that same death knell has been rung multiple times,” said Spring. “[Maybe you like] the name ‘marketplace’ better; maybe that helps people to reimagine the potential of a department store. If I told you we could be in any business we want to be, you’d say that’s a pretty exciting opportunity; you’re not limited to just men’s or women’s or kids or home. If I said in either channel, physical or digital, we can expand or contract any business based on the opportunity that we see that season; if men’s is a little softer and women’s is doing well, we can fund into those things with more people, more advertising, more inventory.
“The key to remember is that the department store is essentially the curation of choice,” Spring added. “We all love choice, and I think the department store is well positioned to offer that. And the three of us together, Bloomingdale’s and Macy’s with the specialty niche of Bluemercury, gives the consumer so many options, but done in a way that makes it easier to shop.”
In particular at Bloomingdale’s, Bron sees the department store as a chance to up the ante on what matters to today’s luxury consumer — story, experience and service. “The store plays a very, very important role in our structure,” he said. “This is where you’re experiencing the brand. Our best marketing investment is actually investing in the store.”
Does the Rise of ‘Dupe Culture’ Pose a Threat to Bloomingdale’s and Luxury in General?
With the popularity, and acceptability, of counterfeits on the rise, fueled by social media “dupe culture” and the trend of quiet luxury, Reagan asked Bron how worried he was about this new threat to luxury. The short answer: not very.
“What’s the point of buying a $5,000, $6,000 bag?” he said. “It’s not about a bag — it’s about a story, an experience. When you buy a [luxury] bag, you buy a story, you buy a history, you buy a social marker. This relationship, this moment, is very, very special. There have always been threats to luxury, our job is to adapt and to find the best value proposition.”
And as Spring pointed out, “there’s a market for diamonds and lab-grown diamonds at the same time. I wouldn’t call lab diamonds a dupe, but the fact is that they both use the word diamond, and there is a market for both.”
Will the new Administration’s Policies on Immigration and Tariffs Cause Problems?
Reagan also asked Spring how he is preparing for changes under the incoming Trump administration, which will take office later this month and has been promising big moves in international trade and immigration. Spring’s response: “This isn’t our first rodeo.”
“We’re paying attention to everything, and we’re going to try to plan for the likely outcome,” he said. “We’ve all dealt with campaigns — [there’s] rhetoric, and then there’s policy. In 2016 and 2017 we had to do more diversification of our private brand development. We worked with all of our market partners to understand how they were thinking about production, and we’re having those same conversations again.”