Macy’s CEO talks tariffs, sourcing diversification
Tariffs, consumer sentiment and store closings were on the agenda this week as Macy’s Inc. chairman and CEO Tony Spring sat down for a conversation during the Yahoo Finance Invest conference.
NEW YORK – Tariffs, consumer sentiment and store closings were on the agenda this week as Macy’s Inc. chairman and CEO Tony Spring sat down for a conversation during the Yahoo Finance Invest conference.
Spring touted Macy’s Inc.’s portfolio of banners – Macy’s, Bloomingdale’s and Blue Mercury – describing it as “a powerful engine of retail is because we appeal to different types of consumers.”
Here are 5 key takeaways from the Nov. 12 conversation.
Tariff Outlook Still Hazy
“This isn’t the first time we’ve seen the discussion about tariffs. We have the experience from the first Trump administration – and the Biden administration left in some of the tariffs.”
He noted that Macy’s and its suppliers have already diversified the department store’s private brand products out of China.
“It’s an ongoing conversation with our business partners, our manufacturers, our suppliers and making sure that they’re thinking about if something can be made outside of China, that’s going to be advantageous. If you can at least balance production into another country, that’s also going to help. Think [tariffs] also opened up South America and other parts of Asia. “
Spring pointed out that the magnitude of new Trump tariffs remains unknown and suggested that in some cases the threat of tariffs might be a negotiating ploy.
“I think there is what people say and there’s what people do. We’re certainly all familiar with what campaign pledges are and then ultimately what comes to pass,” he said, adding that he hopes the incoming administration will forego additional tariffs.
“If it’s anything sizeable and meaningful, we’ll have to evaluate it.”
Should Retailers Pull Forward Receipts?
Asked by the moderator if Spring and other members of the National Retail Federation’s executive committee are thinking about pulling forward merchandise orders to get ahead of tariffs, he responded with a simple “No.”
Retail leaders must be mindful of managing their balance sheets, he explained. “They’re not going to own inventory that they don’t need to own.”
Is Consumer Sentiment Improving?
“I think the level of uncertainty we’ve seen in 2024 has been high on the number of different factors. So, I think post-election, retail is a great [place] for those that want to celebrate and those that want to escape. We are actually a great place for people to come for what we call ‘retail therapy’ – a chance for people to enjoy themselves.”
Later in the conversation, Spring sounded a more sober note.
“Am I cautious about the current climate? Am I concerned when I see the customer being careful about price? Of course. But that frankly just makes us work harder in thinking about how we can motivate the customer to buy.”
Macy’s Store Closing Plan is Firm – Mostly
Macy’s is just 2 quarters into its 3-year Bold New Chapter strategy – which includes shuttering 150 Macy’s stores by the end of 2026 and improving the remaining 350 go-forward locations.
“I don’t see substantially more [stores] closing than that – perhaps a few less, depending on the performance,” said Spring.
He reiterated his love of stores, adding, “but they have to be good stores” as opposed to “stores that were built 50 years ago in a particular suburb where people are no longer going.”
Macy’s originally planned to close 50 stores in 2024, then bumped up the count to 55 units after the second quarter wrapped up.
Plans for Rolling Out “First 50” Store Enhancements Coming Soon
The group of Macy’s department stores that have received investments that enhance the store experience – known as the “First 50” – are showing promise.
Sales are up in almost every family of business. In categories where the business is softer, sales are out-performing the other Macy’s go-forward stores. Brands that hadn’t previously sold Macy’s are now interested in being sold in those stores, said Spring.
“There’s a little bit more traffic, a little better conversion, a little better average order value. We think over time the arc gets better. But so far, so good.”
In shoes and handbags, additional staffing in “First 50” stores is paying off well enough that Macy’s recently expanded staffing in some of its other locations.
The company will announce plans for additional rollouts in early 2025 during its Q4 investor call, he said.
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