Macy's Weaves Magic

Shubh Datta, The Motley Fool
Updated

The recent holiday season was more than kind to Macy's (NYS: M) . The department store saw its profits soar 12%, helped by a "terrific holiday selling season" and robust growth in its online sales for the fourth quarter. The company ended the year on a high as it exceeded management's expectations.

High-end holiday shoppers enhanced sales not just for Macy's but for peer Saks (NYS: SKS) as well. In the quarter, comps at Macy's grew 5.2% and went up by 7.7% for Saks.

A good account
Macy's sales for the quarter grew 6% from the year-ago period and rose 49% on a sequential basis. The store traditionally performs better in the last quarter of the year as shoppers tend to splurge more during the holiday months, so take this second statistic with a grain of salt.

The biggest gain this quarter came from Macy's online offerings at Macys.com and Bloomingdales.com. Online sales rose by approximately 40% for the quarter as well as for the year. These figures have not just boosted the company's top line but also helped improve its inventory management and rate.

Change of tack
Macy's strategy shift over the past few years has helped it record rapidly growing profits in three straight years. A shift to omnichannel integration of stores, which combines in-store offerings with the Web and mobile technologies, has definitely helped the company.

Another thing which has worked wonders for Macy's business has been its shift to MAGIC Selling, a direct strategy for in-store gains that was adopted in 2010. It includes training store associates to better engage customers on the sales floor. Here are the steps involved in making Macy's MAGIC:

  • M: Meet and make a connection.

  • A: Ask questions and listen.

  • G: Give options; give advice.

  • I: Inspire to buy and sell more.

  • C: Celebrate the purchase.

These strategies have really helped improve Macy's in-store experience and the company's performance. I hope they can continue to weave the magic in 2012.

One thing about which Macy's remained silent during its conference call was its ongoing lawsuit against Martha Stewart Living (NYS: MSO) . J.C. Penney (NYS: JCP) struck a 10-year merchandising deal with Martha Stewart, which wasn't well received by Macy's, which filed a lawsuit against Martha Stewart for violating their exclusive merchandising agreement. I'm sure investors would have liked an update.

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At the time thisarticle was published Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above.Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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