NEW YORK – Some price increases are more easily tolerated than others, Macy’s Inc. has discovered.
That was especially apparent last year in furniture, where supply chain and production disruptions started pushing costs up in early 2021 and continued throughout the year.
“What we found is that when you get into some of the sectionals, some of the price points for the larger big-ticket items, you could pass those on,” corporate chairman and CEO Jeff Gennette told analysts during this morning’s Q4 review.
Shoppers were less forgiving of higher tickets for opening price point mattress and sofas, however.
“Something that might have been [ticketed at] $499 one year, to make the same margin it might need to have gone to $549 or $599. In those cases, the customers pushed back,” he said.
Across the company, AURs (average unit retail prices) last year rose a little over 11%. AURs this year are expected to increase roughly 5% across all categories.
Furniture remains a key category focus for the business in 2022, he said.
Other takeaways from the call:
- Business cadence: Macy’s Inc. expects Q1 to show the greatest year-over-year sales increases. Gains through the remain of the year will be more modest, in part because financials are up against consumer spending last year that was fueled by federal stimulus payouts.
- Category expansion: In August, the company will launch Macy’s Marketplace to amplify its digital offerings. The assortment will initially focus on categories tangential to existing businesses before expanding into completely new categories. The biggest change in physical stores will be the rollout of Toys R Us shop-in-shops to all Macy’s full-line department stores in the second half of this year. Among customers who shopped the TRU shops already in select stores last year, 25% were new to Macy’s, and 93% cross-shopped other departments.
- Physical footprint: The company plans to open more off-mall Macy’s and Bloomingdale’s units this year, which attract younger, more diverse consumers. The smaller format Macy’s stores will target markets where less-productive full-line stores are slated to close.
Overall, categories that went dormant during the pandemic are making a comeback, including women’s shoes, dresses and tailored menswear. Meanwhile, winning pandemic categories – including furniture and soft home – continue to show strength, said Gennette.
At Macy’s stores, fourth quarter comp was up 5.2% over 2019 and down 3.2% compared with last year’s Q4. Digital penetration rose to 38%. Bloomingdale’s comp rose 13.0% compared with 2019 and 1.8% year-over-year. Digital penetration hit 42%.
Fourth quarter consolidated net sales for the company ring in at $8.665 billion, up 3.9% compared with Q4 2019 and up 27.8% over last year’s period. Net income more than quadrupled year-over-year to $742 million, or $2.45 per diluted share.
For the full fiscal year, consolidated net sales climbed 41% year-over-year to $24.5 billion. Macy’s Inc. generated net income of $1.43 billion, or $4.55 per diluted share, vs. a net loss of $3.94 billion, or $12.68 per diluted share.
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February 23, 2022 at 02:15AM
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Macy's identifies pain points in furniture price increases - Furniture Today
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