Dive Brief:
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New York City-based department store Macy’s reported a Q4 sales increase of 2%, missing expectations. Net income fell to $793 million year over year, and earnings rose $2.26 from $2.16 per share on a lower share count.
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The retailer said that work slowdowns at West Coast ports had been disruptive and would hit results for the next quarter.
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The company also announced that it will invest heavily in discount stores that sell seconds, canceled orders, and returns.
Dive Insight:
Macy’s is joining the wave of retailers that have lower-priced counterparts that can capture dollars from deal-seeking consumers. Off-price stores like T.J. Maxx and Marshall’s have been doing well in the current retail environment compared to many other clothing retailers. But the move carries the risk of diluting a flagship brand, especially if the goods are not just off-price but also low quality.
"The off-price sector remains quite well-positioned, given consumers' admiration of the brand offerings and treasure hunt atmosphere," Nomura Equity Research analyst Robert Drbul wrote in a client note.