Macy’s to woo May patrons with marketing revamp

CINCINATTI —Former May Co. department stores converted into Macy’s continue to produce lower-than-expected sales results, and Macy’s Inc., the company formerly known as Federated Department Stores, is planning to revamp its marketing strategy this quarter to try to amend the problem.

“We do need to communicate more effectively, and we need to bring more customers in to try the Macy’s store,” said Karen Hoguet, Federated’s cfo, during a conference call to discuss the company’s first-quarter earnings. “While we are having success building a proprietary database, we need more time to be effective. Until that happens, we are going to have to advertise more in the public media rather than in direct mail.”

Hoguet said that Macy’s plans to take a more promotional stance this fall with former May Co. doors, in order to try to attract customers back into its stores. Federated had originally curbed the number of promotions and coupons when it converted stores last fall to be on track with the promotion schedule of its already existing Macy’s doors, but the company has since found that it needs a way to entice this former May customer to try out the new Macy’s.

Poor sales “are primarily a foot traffic issue,” Hoguet said. “And it’s been a whole lot weaker in the home store. More public advertising will bring more people into the store.”

Going along with this strategy, Macy’s Inc. plans to stake out more advertising in television and paper. This strategy is designed to attract former May Co. shoppers who are less likely to have store credit cards and thus, less easily targeted by direct mail efforts. Advertising in markets for established, or “legacy,” Macy’s stores will remain the same, as its consumers are less promotion-oriented, and its sales were on target for the first quarter, meeting company expectations.

The lag in shoppers coming to new Macy’s stores contributed to below-average results for the company’s first-quarter results. Sales in the first quarter totaled $5.92 billion, a decrease of 0.2% compared to sales of $5.93 billion in the same period last year. These results were the company’s guidance for first quarter, which was in the range of $6 billion to $6.1 billion. On a same-store basis, Federated’s first-quarter sales were up only 0.6%.

“Sales in the quarter were soft, particularly in April,” said Terry Lundgren, Federated’s chairman, president and ceo, in the company’s first-quarter sales statement. However, Lundgren is optimistic that Macy’s will be able to pump its results back up to expectations by the second half of the year, as the anniversary of the conversion of former May Co. stores approaches in September.

“While April has given us some concern about the consumer and the economic environment, we remain optimistic that our trends will improve,” Lundgren said.

As of June 1, as anticipated, Federated changed its name to Macy’s Inc., and it will trade under the symbol [M] on the stock exchange. The name change is not meant to signal that the company plans on selling or de-emphasizing its Bloomingdale’s brand. However, it is meant to promote more awareness of the Macy’s brand, which does account for 90% of the company’s revenue, Lundgren said.