Macy’s Sales Drop 20% in Q3 in Light of COVID-19 and Their Customers’ Changing Spending Habits

By Bruce Harpham Tuesday, November 24, 2020

Macy’s (NYSE: M) continues to struggle during the pandemic. In Q3, the company’s same-store sales figures were down 20%. The company did manage to boost digital sales revenue. Unlike Walmart, Macy’s digital sales growth is not growing fast enough to offset traditional sales. The company’s struggles have directly impacted the stock price closing at $9.05 on November 20 — a fraction of its $17 stock price in early 2020.

Macy’s Q3 Dire Retail Results

As a large retailer with limited digital capabilities, Macy’s struggles reveal the state of bricks and mortar retail in the age of COVID-19 and elevated unemployment.

  • Net Sales. Year to date, net sales in 2020 were $10.5 billion, down from $16.2 billion in the same period of 2019.
  • Net Income. By this point in 2019, Macy's had reported a small profit of $224 million. In contrast, the retailer is showing a loss of $4.1 billion.
  • Improved Margins. The gross profit margin was one of the few bright spots in Q3. Macy's achieved a gross margin of 35.6% in Q3, up significantly from the 23.6% reported in Q2 2020. The company achieved this improvement with better inventory management and better sales of regular and discounted products.
  • Liquidity. Fortunately, the company will be able to keep the lights on for quite some time. The company has a relatively strong cash position with $1.6 billion in cash. Also, the company has several billion more available in a credit facility. However, lenders may reassess their willingness to provide credit if the retail giant loses billions in revenue.

Signs of Hope in Digital Sales

While total digital sales remain small, Macy's management highlighted a few developments in the digital channel. In the second quarter of 2020, two million customers made purchases through the Macy's website. According to Jeff Gennette, Macy's Chairman & Chief Executive Officer, "we are seeing good retention rates with many having made repeat online shopping visits."

How Macy's Relies on DoorDash

COVID-19-weary consumers don't have to visit Macy's stores to make purchases or pick up products. Instead, the company uses gig economy startup DoorDash for delivery fulfillment. Besides, the company has released new software to speed up curbside pickup orders.

DoorDash is an attractive option for retailers that quickly need to add delivery services. The company offers delivery in all 50 US states. Also, DoorDash allows brands to customize the delivery process. Such customization likely helps to strengthen the brand's reputation. Other companies interested in adding delivery may want to consider working with companies like DoorDash or Postmates to expand delivery capacity.

Macy's 2020 Holiday Shopping Plans

Macy's has high hopes for increased revenue in Q4 due to the holiday shopping season. The company will offer same-day delivery and curbside pickup up "until December 24." For health and safety reasons, Macy's will encourage more customers to buy digitally.

What Products Are Selling Well and Which Ones Are Down

Macy's is seeing changes in customer buying patterns. A few categories of products are seeing significant declines in volume, such as clothing and formal wear. As Gennette put it, "occasion-based activity, so that's weddings, proms, just going out," related shopping may only pick up after large scale COVID-19 vaccination is completed.

Certain other categories are seeing much higher levels of demand. Home furnishings and home-related products are up. In the sportswear category, children's products are selling more than clothes for men and women.

Continued Focus On Loyalty Programs

With several million new customers coming to Macy's in the third quarter, the company is working hard to convert those new buyers into repeat business. Specifically, Macy's is seeing higher levels of enrollment in its Bronze loyalty program. By enrolling in this program, Macy's can send more personalized advertising. Overall, the company has 9 million members in its Bronze program.

The Four-Tier Macy’s Rewards Program

Macy's loyalty program gives customers multiple options and rewards to choose from. The Bronze program offers customers 1% of their Macy's stores back in rewards. They also offer a 2% reward rate for cardholders that spend between $1 and $499 at the store annually in the silver program. That's just half of the program, however.

The top two tiers of Macy's loyalty programs offer higher levels of rewards. The Gold program gives customers a 3% reward rate on Macy's spending, with a minimum annual spend between $500 to $1,199. Finally, the platinum loyalty program level offers a 5% reward to customers who spend more than $1,200.

About the Author

Headshot for author Bruce Harpham

Bruce Harpham is an author and marketing consultant based in Canada. His first book "Project Managers At Work" shared real-world success lessons from NASA, Google, and other organizations. His articles have been published in, InfoWorld, Canadian Business, and other organizations. Visit for articles, interviews with tech leaders, and updates on future books.

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