With Saks going bankrupt, Macy’s is gaining some momentum

Macy’s and Bloomingdale’s: Standing Strong Amid Retail Challenges

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The Luxury Retail Landscape: A Grim Outlook?

At first glance, the high-end retail sector appears to be in dire straits. Much like the popular meme of the Grim Reaper knocking on doors, several iconic department stores have fallen—Barneys, Lord & Taylor, Neiman Marcus (twice), and most recently, Saks Global, which filed for bankruptcy late Tuesday.

Is Macy’s next in line for trouble?

Perhaps. But the story isn’t so simple.

How Macy’s and Bloomingdale’s Are Bucking the Trend

There’s another possible outcome for this period of upheaval in retail—one where Macy’s and its upscale sibling, Bloomingdale’s, continue to outperform expectations by sticking to the basics of good business management.

It turns out that customers appreciate retailers who focus on the essentials.

With Saks now on the sidelines, Bloomingdale’s—its main competitor—has an opportunity to expand. Over the past year, as Saks reportedly struggled to pay suppliers, Bloomingdale’s has already attracted some of its business. According to retail analyst Neil Saunders, Bloomingdale’s is well-placed to continue gaining ground as Saks navigates bankruptcy, especially if Saks and Neiman Marcus close stores or face inventory shortages.

This momentum adds to Macy’s reputation as a standout survivor in the post-pandemic era, where many department stores have struggled.

Resilience Through Adversity

Macy’s barely made it through the pandemic, a time when demand for luxury goods plummeted and shoppers flocked to online giants like Amazon.

Since then, Macy’s has twice resisted takeover attempts by private equity firms more interested in its valuable real estate than its retail potential.

By turning down these offers, Macy’s prioritized the interests of its shareholders—a bold but logical decision, considering the fate of other retailers that have been acquired by private equity, such as Sears, Lord & Taylor, RadioShack, Toys ‘R’ Us, Payless Shoes, and Sports Authority.

Back to Basics: The Turnaround Strategy

Instead of selling out, Macy’s doubled down on the fundamentals. Nearly two years ago, the company appointed Tony Spring, a longtime Bloomingdale’s executive, as CEO to lead a transformation. Part of his approach has been refreshingly simple: tidying up stores, fixing broken fitting room locks, and ensuring staff are available to assist customers—basic, yet effective steps.

Over the last two years, Macy’s has shuttered more than 100 underperforming locations, with plans to close 14 more this year.

Although it’s still early, these efforts are paying off. In September, Macy’s reported its first quarterly sales increase in years—a modest gain of less than 1% year-over-year, but still far exceeding Wall Street’s expectations and briefly boosting its stock by 20%. In December, the company again surpassed forecasts, posting its strongest same-store sales growth in over three years.

Challenges Remain for Macy’s

Despite these positive signs, Macy’s still faces significant hurdles. Saks and its affiliates could recover from bankruptcy and become fierce competitors once more. Meanwhile, the shift to online shopping—a major factor in the decline of brick-and-mortar stores—shows no sign of slowing down.

Additionally, the retail landscape has changed dramatically over the past five years, forcing a reevaluation of the department store model. Many shoppers have become disenchanted with luxury retail, citing rising prices and declining quality. The resale market for luxury goods is thriving on platforms like The Real Real, and many high-end brands have realized they can reach customers directly through targeted social media advertising, bypassing department stores altogether.

The Path Forward: Fundamentals Matter

Nevertheless, experts like Neil Saunders believe that Macy’s commitment to the basics gives it the best chance for continued success. “The bankruptcy of Saks Global highlights the necessity for luxury department stores to prioritize customers and core retail principles,” Saunders explained. “Tony Spring and his team have embraced this approach, and it’s paying off. Saks’ situation will likely encourage them to keep pushing forward with their strategy.”

Reporting by Luciana Lopez and Nathaniel Meyersohn for CNN.