As coronavirus cases spike and new restrictions pile up across the country, there’s been a renewed debate about what constitutes an essential business.
Macy’s CEO Jeff Gennette thinks the designation shouldn’t apply. Instead, health and safety measures should dictate whether a store should be open.
“We don’t believe the designation of essential and nonessential should play in retail. We believe you either have a safe environment or not,” Gennette said on a conference call today. “You should be held accountable to health and safety standards, and we stand by those. And based on how we’ve performed and based on how our customers have signaled to us, we’re doing a great job with that.”
Addressing the possibility more temporary closures — which dramatically impacted the retail sector in March and April — the CEO said he believes Macy’s can operate through the pandemic and keep all of its stores open. “We’ve clearly shown that we know how to keep our colleagues and our customers safe. And so that’s what we’re clearly pushing through the NRF and RILA [retail lobbying organizations], working with all of our municipal leaders as well as governors.”
During the past week, as cities and states implemented stepped-up measures to curb pandemic spread, most areas have allowed non-essential retailers to remain open, albeit with reduced hours or capacity restrictions. In California, for example, occupancy in retail stores is limited to 25%.
Gennette said he doesn’t anticipate many full closures, but the company had modeled them into its plan. “If they were to happen, we’ll be ready,” he said.
As the holiday season kicks into gear, another worry for big retailers like Macy’s is the lack of tourists and office workers shopping in cities.
“Clearly, the stores that are performing the worst are the ones that are in our downtown locations,” Gennette said. “So when you look at Macy’s Herald Square, or Bloomingdale’s 59th Street [in New York] or State Street [in Chicago] or Union Square [in San Francisco], they’re our most challenged.”
Like Nordstrom and other department store rivals, Macy’s is emphasizing the local customer. “The teams have been very focused on giving great experiences, inviting those consumers into those buildings. So we’re seeing purchasing go up. But when you look at the transient population and the tourist business, that’s been the most challenged.”
Macy’s today reported a third-quarter net loss of $91 million, or 19 cents a share, compared with a profit of $2 million, or 7 cents, in the year-ago period.
Revenues fell to $3.99 billion in the last quarter, from $5.17 billion in the year-ago period. And while digital sales increased 27%, comps were down 20%, setting off some alarm balls in the investment community.
Still, the company beat estimates for both sales and earnings.