Macy’s sales surge thanks to tourist shoppers
Macy’s is finally getting its mojo back — with a little help from foreign tourists.
Same-store sales popped 4.2 percent in the chain’s fiscal first quarter — the second straight quarter of growth — and management of the 160-year-old brick-and-mortar icon raised its profit forecast for the year.
The company said its better-than-expected performance was fueled by a surge in spending by Chinese, Canadian, Brazilian and other international tourists at its big city stores.
“Consumer spending remains strong and we saw significant improvement in international tourism spending,” said Chairman and Chief Executive Jeff Gennette on an earnings call with analysts. “We anticipate this to continue through the year.”
Investors cheered the news, sending Macy’s shares up 11 percent on Wednesday, to $33.17 — after hitting a 52-week high of $33.40 earlier in the day.
Total sales rose 3.6 percent, to $5.54 billion, as the company is beginning to reap the rewards of its turnaround plan — which includes an enhanced loyalty program.
The unexpected spike in international spending — up 10 percent from last year — marks only the second time since 2014 that spending by international shoppers has increased, the company said.
International shoppers represent 5 percent to 10 percent of Macy’s sales, according to Gordon Haskett analyst Chuck Grom.
“It gave them more confidence to raise their overall sales forecast,” Grom said, adding that, last year, international spending had declined by 3 percent to 5 percent in the first three quarters of the year and was down 2 percent during the holiday quarter.
Macy’s is the first major retailer to report that overseas tourists have returned in force, said retail consultant Jan Kniffen. “This trend is likely just starting and could bode well for luxury retailers like Saks Fifth Avenue, Tiffany’s and others,” as these shoppers spend four times as much as domestic shoppers.
International inbound travel to the US spiked in March and was at the highest level since April 2014, according to the Travel Trends Index, which attributes the surge to a weaker US dollar — which makes it less expensive to travel to the US — and healthy economic indicators. Travel to the US is much higher than people had expected, according to the US Travel Association.
Macy’s does its part to attract these lucrative shoppers, including marketing partnerships with credit cards, airlines, hotels and tour operators, according to a spokeswoman. Its five top tourist markets are China, Canada, Mexico the United Kingdom and Brazil.
At its key tourism stores, including the Big Apple’s Herald Square location, Macy’s offers foreign shoppers a discount card, which they pick up in the stores at a visitor center. Shoppers must identify themselves with their passports.