Terry J. Lundgren flexed some of his Macy’s Inc. muscle for Wall Street Wednesday, touting the company’s mobile prowess and its willingness to partner with brands such as Finish Line and Lids to grab market share at a Goldman Sachs investor conference.
Even so, he said, a little boost to prices would go a long way on the bottom line.
“I’ve always believed that a little bit of inflation in our category would be good for our business,” said Lundgren, who serves as chairman and chief executive officer at the chain. “I’d love to see that someday. It has happened, by the way, in the center core categories, in the handbag and the shoe categories, and some of the jewelry categories. It just hasn’t happened in apparel.”
Lundgren attributed at least part of the pricing dynamic to competition on the production front.
“The minute that China has higher wages and begins to have higher prices, Indonesia is begging for the business, Vietnam’s begging for the business,” he said. “And so we were able to source products in different places and keep pricing down.”
Lundgren said the consumer could handle a “tiny bit of inflation.”
Macy’s president Jeffrey Gennette also has a wish list.
“I would love some more hot trends in women’s that we can draft off of,” Gennette said. “There isn’t enough newness in the ready-to-wear world right now, that is [the] go-to trend, the go-[to] item, that can really fortify a customer’s reason to come into a store, buy that item and buy everything else that makes that item complete.…Hot trends drive our business and we’re in a fashion business and we’re a fashion retailer.”
The yearning for a little more pricing power and must-have items speaks to the general blah-ness in the consumer landscape.
“The rebound that we were all expecting in this year hasn’t happened,” Lundgren said. “The consumer has not bounced back with the confidence that we were all looking for. And so the performance I think we had in the second quarter and we expect to have in the second half is going to be a continuation of what we’ve been able to do over the last several years and that is to capture market share and get the most out of the consumers that are in our stores.”
Macy’s was just one of the top fashion companies making their pitch to investors at Goldman Sachs’ 21st Annual Global Retailing Conference at The Plaza hotel in New York City.
John Idol, chairman and ceo at Michael Kors Holdings Ltd., said he is also looking for a continuation of recent trends in the second half, although Kors has seen 33 straight quarters of U.S. comparable-store sales growth in the double digits.
“We feel strongly about the second half,” Idol told investors at the Goldman conference. “The American economy in particular continues to expand, although not dramatically, but it is growing. We see our position in Europe as being one where we are taking market share…and in Asia this category that we operate in is starting to grow very, very significantly.”
Kors has a number of irons in the fire to try to keep pace with that growth rate, from wholesale accounts to full-price and outlet stores to online, where the brand has proven to resonate in the social sphere.
“We are very focused on social media as a way to increase brand awareness and as a way to really engage with our customers on fashion trends,” Idol said. “We know from both Facebook and Instagram that we have some of the highest levels of engagement of any of their partners, not just in fashion, but in other categories, as well…we are a fashion consultant to a lot of consumers out there.”
The company updated its e-commerce site Wednesday, making it easier for customers to see how to wear the brand’s looks. Idol said the idea was to bring the in-store Kors experience online.
And in turn, Kors’ stores are going to get a digital boost.
“This time next year we will have all of our sales associates armed with iPhones and/or iPads,” Idol said. “We really believe that as you see mall traffic in the United States leveling off, that it is more important to get your conversion rates up inside of stores.”
Kevin Plank, chairman, president and ceo of Under Armour Inc., was also talking up his company’s growth rates, noting that the company will add 60 doors outside the U.S. this year.
Under Armour is looking to up its fashion credibility, linking up with model Gisele Bündchen.
“Her commercial…has people maybe thinking a little bit differently about the idea that they had of what Under Armour was and what kind of a brand we were, maybe any limitations that we had, but we think that there’s a lot of great stories to be told,” Plank said.
The move is another indication of how seriously the ceo is in zeroing in on the women’s market.
“We are proud of [the] $500 million wholesale business that we built in women’s to date and I don’t believe we’ve gotten a lot of credit for that,” Plank said. “Without question, we identified women’s a couple of years ago and said that we are going to target it and it’s been clearly one of our growth drivers of the company.”
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