Retail's most important week is finally here. And while sales around the Thanksgiving holiday are always critical for retailers, this year the stakes are even higher. There are six fewer holiday shopping days this season, making it the most compressed calendar we've had in a decade.
That time crunch will create some hurried shopping for consumers, but it also puts pressure on companies to start strong. With that in mind, let's take a look at whether Macy's (NYSE:M) can beat back the competition on Black Friday and through the holidays.
The 200-year-old retailer managed to book a solid holiday last year despite the intensely competitive retail environment. Thanks to big Black Friday promotions, Macy's saw the highest-volume Thanksgiving weekend in its history in 2012. Internet sales were a bright spot, as the Macy's and Bloomingdales sites logged 39% sales growth in November, and a whopping 52% jump in December. Altogether, comparable-store sales grew at Macy's by a respectable 3.7% over the holiday quarter.
That wasn't as good as Nordstrom's (NYSE:JWN) 6.3 % boost, but it beat Kohl's (NYSE:KSS) 1.9% rise. Macy's also trounced the sales growth figures that Target and Wal-Mart managed. And notably, it didn't have to resort to deep discounting to keep those revenue numbers rising.
This year's strategy
Competition will be just as fierce this year, but Macy's has a deep playbook to tap. Building on what worked in 2012, the company has polished its mobile shopping app, which helped smartphone and tablet-wielding shoppers find deals within Macy's stores during last year's Black Friday. Following the trend among major retailers, it also plans to get the festivities started early by opening at 8 p.m. on Thanksgiving and offering a slew of exclusive deals.
Moreover, Macy's has upgraded what it calls its "omnichannel" strategy of delivering products into customers' hands, whether it's at physical stores or through online orders. It had about 300 stores retrofitted at this time last year to act as shipping centers for Internet sales. That number has jumped to 500 stores for this holiday season, giving the retailer a key advantage as shopping continues to move online.
"More than our fair share"
As for the company's expectations, Macy's latest forecast sees quarterly sales growth that could reach as high as 4%, suggesting that management feels confident it can execute around the Black Friday mania.
Karen Hoguet, the CFO, probably summed up that conviction best in a conference call with analysts earlier this month when she said, "We believe we are well positioned to capture more than our fair share of the [holiday] business."
Macy's has a good plan in place for Black Friday and for the holiday season, so it seems Hoguet's confidence is deserved. Yes, this will probably be another rough season for many retailers, but Macy's looks set to turn in some respectable results.