Macy's (NYSE:M) will continue its off-price expansion with the planned opening of 16 new Backstage locations. Fifteen will be shops located inside existing Macy's stores and just one will be a stand-alone unit.
The retailer reported a full year drop in total and comparable stores sales of 3.7 percent and 2.5 percent, respectively. And while sales rebounded somewhat after a disappointing holiday season thanks to colder weather, the retailer is still struggling to transition from a traditional department store to one that resonates with younger, digitally savvy shoppers.
To that end, Macy's is investing in online programs, closing full-line stores and adding branded shops within Macy's stores. And now its Backstage format will be one of those stores within the store.
"We are encouraged by the way the business responded going into 2016, and we believe we are well positioned to stabilize sales levels this year as we lay the foundation for enhanced shareholder value and sustained, long-term profitable growth," Macy's CEO Terry Lundgren said in a company statement. "Given our determination to rise above our disappointing 2015 performance, I have reminded my team that our setback last year is a setup for our comeback.
Digital continues to grow in the double digits, driven by increases in mobile interactions.
"After the previous six consecutive years of cumulative success, 2015 reminded us that retailing is a dynamic business that requires continuous reinvention as the customer evolves. Today, we are examining every aspect of our business so we can grow profitable sales and re-attain our goal over time of an EBITDA rate as a percent of sales of 14 percent," said Lundgren.
Macy's opened the first standalone Backstage store in September. The 30,000-sq.-ft. location offers merchandise at up to 80 percent off regular prices. The addition of these departments inside the larger department stores could indicate a dramatic shift from the retailer's focus as a full-line department store to one transitioning into today's popular off-price format.
-See this Business Insider story
-See this Macy's financial statement
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