Inside Retail US’ Post

During the 2nd quarter, both Nordstrom & Burlington were the clear winners in their categories. Let's look at the department store category vs the off-price retailers category in terms of 2nd Quarter 2024 performance. Sales & Comp Sales are all 2nd quarter figures, as compared to year-over-year: Department Store: Kohl's - Sales down 4.2% - Comps Sales down 5.1% Macy's - Sales down 3.8% - Comp Sales down 4% Nordstrom - Sales up 3.4% - Comp Sales up 1.9% Off-Price Retailers: TJX - Sales up 5.6% - Comp Sales up 4% Ross - Sales up 7.1% - Comp Sales up 4% Burlington - Sales up 14.4% - Comp Sales up 5%

It has been another good quarter for off-price retailers, with most of the chains remaining in growth despite already having had a great run over the past few years. The chart below shows the sales growth in percentage and actual dollar terms each chain has achieved for Q1 2024 compared to Q1 2019. The growth of the overall market for home and apparel across all of retail (not just off-price) in the US over the same period is also shown. Collectively, the four off-price players shown added $4,379 million in sales. That means they captured 18.4% of all market growth in those categories over the period. That’s a stellar performance. It also underlines that the growth coming from retail is not equally distributed, which is why there are patterns of winners and losers. Off-price, though, is firmly in the winners camp - although not Nordstrom Rack which has severely underperformed. #retail #retailnews #offprice #value #discount #apparel #home Ross Stores, Inc. The TJX Companies, Inc. Nordstrom Burlington Stores, Inc.

Retail economy is moving towards BMSM - Buy More, Save More. Consumers are becoming value conscious and prioritizing savings in their purchase decisions.

At our agency, we refer to this channel as "premium value" - here is a great article written by our CEO back in 2017 https://lnkd.in/ge8sb2H9

“Macy's on Tuesday forecast annual sales and profit below expectations and said it would shutter about 150 stores through 2026 as part of a new plan that would help save $100 million in costs this year.” “Its shares rose 7% as the department store chain also beat quarterly profit estimates. They have lagged peers in 2023, declining about 3% compared to a 13% jump in rivals Nordstrom and Kohl's.” “The locations made up for less than 10% of Macy's annual sales and were mostly underperforming mall-based stores, CFO Adrian Mitchell told Reuters.” “"Fiscal 2024 will be a transition and investment year", CEO Tony Spring said on a conference call, adding he expects Macy's to return to consistent sales and profit growth from 2025.” “It also said it would open 15 Bloomingdale's locations and at least 30 new Bluemercury stores over the next three years to accelerate growth for its better-performing luxury brands.” “Its holiday-quarter comparable sales declined 4.2% on an owned-plus-licensed basis, better than analysts' estimates of 5.8% drop, as steep discounts drew shoppers.” “However, net credit card revenue fell 26% to $195 million, in a sign that economic pressure, particularly among its low- and middle-income customers, led to higher bad debts.” - Kate Masters, Savyata Mishra

IN OFF-PRICE RETAIL NEWS... Nordstrom to open 22 new Rack stores in 2024 after launching 19 in 2023. Nordstrom reported a 2.2% increase in Q4 net sales to $4.3 billion, with total revenue reaching $4.4 billion. Despite a 3% decline in full-line Nordstrom sales, the off-price Rack segment saw a robust increase of 14.6%. 👀 While digital sales accounted for 38% of total sales, experiencing a slight decrease of 1.7%. Analysts express optimism about Rack's growth potential but note risks due to challenges in the full-line business and the volatile nature of off-price retail. Nordstrom expects fiscal 2024 to be a year of continued momentum with new Rack store openings, digital sales growth, and driving comparable store sales. Retail Dive with all the details https://lnkd.in/entAZVwY 🛍 *** #Retail #OffPrice #Stores #Nordstrom #Rack #Shopping #Business #News

At Nordstrom's department stores, Q4 sales declined by 3.0%. On a comparable basis – removing the extra week of trade and the closure of Canadian stores – sales were down by around 3.6%. This is a middling result for a player in the department store space, but it underlines the fact that Nordstrom is still losing both customers and market share at its department store business. Admittedly, economic conditions are not blowing in Nordstrom’s favor and even its somewhat more affluent consumers cut back in the final quarter, much as they have done across the fiscal year. As much as there are headwinds, Nordstrom is doing itself no favors. Over the past year there has been a very notable deterioration of the experience at department stores. Customer service standards are much weaker, merchandising isn’t up to scratch, and the general assortment has become lackluster. During the holidays, in many stores Nordstrom seemed to make very little effort and, as such, wasn’t so much of a destination, even among those with money to spend. While Nordstrom’s stores are nowhere near as bad as some of its peers, with relatively high price points it cannot afford to allow the proposition to slide in such a dramatic way. I spoke with Retail Dive about the problems plaguing Nordstrom's full-price stores, which is now why it's leaning even more heavily on the off-price Rack business. Link to article in the comments. #retail #retailnews #departmentstores

$3.8 billion CASH to go private! The Nordstrom family has teamed up with El Puerto de Liverpool to make this offer of $23 per share. The details: ▪️Financing would include rollover equity and cash commitments from the Nordstrom family and Liverpool, as well as, $250 million in bank financing ▪️Existing debt would remain outstanding The proposal is now being reviewed by a special committee of the board. As of 9:50 am EST, the stock price is at $23.20. Although we saw some glimmers of hope in Q2 earnings, there is still a lot of road to cover to turn things around. The interesting part to me is that of the 365 stores in operation – approximately 70% are Nordstrom Rack stores which shows the most promise. As of the 2023 annual report, the Rack banner (stores + online) only produced ~34% of net sales. You have the "full price" banner producing a disproportionate amount of sales. The decision is not so clear cut. Is it a good deal? Retail Dive 🔗 in comments. #retail #stores #omni #deals

Department stores are feeling the pressure in 2024 as competition from off-price retailers and shifting consumer preferences take a toll. Large department stores such as Macy’s are closing 150 stores, Nordstrom is focusing on Rack, and J.C. Penney is undergoing a major transformation. With younger shoppers favoring discount options, the future for traditional department stores remains uncertain. Discover how these retailers are adjusting to survive in the shared article. #RetailTrends #DepartmentStores #RetailStrategy #ConsumerBehavior

In 2017, Jeff Gennette took over as Macy's CEO from Terry Lundgren. At the time the business was posting flagging sales, had just announced a slew of job cuts and store closures, and was facing a potential takeover from Hudson’s Bay Company. Fast forward to today and Tony Spring, who has just taken the CEO reins, assumes control against a remarkably similar backdrop: sales declines, store cuts, job reductions, and a takeover bid that Macy's has not fully squashed. It shows how little things have changed. To be fair, Mr Gennette has not stood entirely still. A smaller format has been rolled out, an off-price division has been established and expanded, and there has been an improvement in omnichannel. But, despite this, Macy's essentially remains the same tired business that's losing market share - especially from established stores. What has not been tackled is the sales line. Since 2017, here's how spending has changed in they US overall and at Macy's and other retailers: * Total US non-food spending growth (2017-2023): +46.9% * Macy's sales (2017-2023): -8.0% * Target's sales (2017-2023): +51.4% * Dillard's sales (2017-2023): +10.2% * Kohl's sales (2017-2023): -13.9% * TJMaxx / Marshalls sales (2017-2023): +566.7% This is basically a chronic underperformance and represents a massive loss of market share. And it comes despite the initiatives that have been in play. Growing sales requires investment, creativity, and energy. Sadly, all these things are still in very short supply at Macy’s. While other retailers, like Walmart and Target, have committed to investing billions into improving stores, ranges and customer service, Macy’s has only dabbled with a few halfhearted initiatives. And it consistently refuses to invest in its ailing shops where standards remain abysmal. Can Tony Spring change this? The worry is that an internal appointment will not move the dial on some of Macy's flawed thinking. However, there is a glimmer of hope from the fact Mr Spring has a merchandising background and has kept standards at Bloomingdale's high. The jury remains out on whether a change in CEO will bring a change in trajectory for Macy's, or will be another period of more of the same. #Macys #retail #retailnews #departmentstores #TopRetailExperts