Macy’s experiments with “dark stores”

Retailer saw net loss of $91M in third quarter

Macy’s CEO Jeff Gennette (Getty; iStock)
Macy’s CEO Jeff Gennette (Getty; iStock)

As Macy’s grapples with a net loss of $91 million in the third quarter, the brand is reimagining what the future of its business may look like.

One possible answer: fulfillment centers.

As two of its stores went “dark,” or closed to in-person shopping, they were converted into processing centers for online orders. The stores, in Colorado and Delaware, will be used to fulfill online and curbside orders.

“We’re experimenting with that,” Macy’s CEO Jeff Gennette said on an earnings call Thursday.

Other brands, including Whole Foods, are testing out dark stores as shoppers have avoided in-person retail due to the pandemic.

Overall, Macy’s recorded $3.9 billion in net sales, below the $5 billion it racked up during the same time last year. Still, its earnings were above what it recorded in the second quarter, when the retailer suffered a net loss of $431 million.

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The company’s sales were largely driven by an increase in e-commerce, which grew by 27 percent over the same time last year. Online sales made up 38 percent of the company’s total sales in the third quarter.

The retailer operates 764 stores across its Macy’s, Bloomingdale’s and Bluemercury brands, but seven locations have closed between the second quarter and now.

Gennette also noted that while Macy’s neighborhood locations are seeing customers return, their flagships are struggling, largely due to the lack of tourism and office workers.

“When you look at Herald Square, you look at 59th Street at Bloomingdale’s, State Street, Union Square — they are our most challenged,” Gennette said.

Other stores are similarly reckoning with the prominence of e-commerce and how to fulfill online orders. On Wednesday, Target announced that it would take a different approach: opening more stores to fulfill digital sales.