Takeaways From Our Department Store Expert Call: M Positioned To Be Mid-Tier Consolidation’s Biggest Beneficiary

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Takeaways From Our Department Store Expert Call: M Positioned To Be Mid-Tier Consolidation’s Biggest Beneficiary

UpdateMuniform industry decline – as a key go-forward theme, while emphasizing meaningful

differences by tier. More specifically, she noted 1) luxury dept. stores are facing

greater competition for consumer wallet share from travel, experiences, & health/

wellness than historically, while 2) lower-tier/value dept. stores must compete

against big-box retailers & eCommerce platforms with greater scale &/or wider

branded offerings. On the other hand, Tsen Ward highlighted mid-tier dept. stores as

compelling for 1) their lower exposure to the aforementioned trends, & 2) the fact

that they have a meaningful opportunity to acquire younger customers that value

multi-brand physical retail experiences. We agree with Tsen Ward’s identification of

consolidation as a key industry dynamic going forward, & think M is positioned to

benefit as weaker competitors lose relevance (more below & here).

Macy’s has many characteristics that could enable it to be the primary mid-tier

department store share consolidator. Recall that after years of revenue declines at

the Macy’s banner, M launched its Bold New Chapter plan in ’24, centered on closing

~150 underproductive stores, investing in its ~350 Go-Forward locations &

“Reimagine” stores, modernizing the assortment, improving the customer

experience, growing the luxury offering, & simplifying operations, among other

initiatives (more here). Early results point to a fundamental improvement, with

Macy’s Go-Forward banner comps turning positive in 2Q25 & remaining positive

since then. In our conversation, Tsen Ward commended M’s efforts, & was

constructive on numerous qualities that position it well amid share consolidation –