Macy’s Inc. likes to tout its consistent double-digit online sales growth. Chief financial officer Karen Hoguet told analysts earlier this month on the retailer’s second quarter earnings call that Macy’s has grown its year-over-year online sales by double digits for 32 consecutive quarters.
However, that’s only part of the story. Macy’s has reported net sales declines for 10 consecutive quarters, with its last year-over-year quarterly net sales gain taking place in the second quarter of 2014. Furthermore, Macy’s has posted year-over-year net sales gains in only two of the past 14 quarters, dating back to fiscal first and second quarters of 2014.
Hal Lawton
This is the situation that veteran e-commerce executive Hal Lawton will step into when he takes the reins Sept. 8 as president of Macy’s, No. 6 in the Internet Retailer 2017 Top 500.
Lawton, named to the Macy’s job Aug. 21 when he stepped down from eBay Inc., wrote on his LinkedIn page that he’s “excited to be joining Macy’s—an iconic brand that is incredibly well positioned for success in the changing retail environment.” Lawton had been senior vice president of eBay North America, where he led eBay’s U.S., Canada and Latin America marketplaces business unit.
Some analysts view Macy’s hiring of Lawton as president—a title CEO Jeff Gennette had held—as a sign of the retailer’s changing mindset.
“While the move won’t impact sales or profitability overnight, we think the addition could mark the beginning of a new chapter for Macy’s,” retail analysts Chuck Grom, John Parke, and Andrew Minora of Gordon Haskett Research Advisors wrote in a note. “While Macy’s has yet to entertain acquiring digital native brands (ala Walmart’s recent moves), one has to think that the addition of Mr. Lawton will bring a fresh perspective—one that is arguably long overdue.”
Lawton will start at Macy’s with a $1 million salary and $1.25 million target bonus, plus stock options and performance-linked restricted shares worth $4 million in fiscal 2018. His contract also entitles him to a $5.5 million cash sign-on bonus and equity grants valued at $10.5 million meant to replace compensation from his former employer that he forfeited.
Lawton brings established e-commerce credentials to a retailer that, like many other retail chains, is trying to do a better job of leveraging its store fleet as a competitive advantage with online shoppers.
Lawton spent a decade with home improvement chain The Home Depot Inc. (No. 7), rising through the ranks to become the company’s senior vice president of hard lines after also serving as its president of online. During his time leading Home Depot’s online sales efforts, from September 2009 to January 2013, Home Depot grew its online sales to $1.794 billion in 2012, his final full year in charge of online, up 75.9% from $1.020 billion in 2010 during his first full year at the helm according to Top500Guide.com.
Lawton’s experience leading e-commerce operations for a large retail chain made him attractive to Macy’s.
“Hal Lawton has deep expertise at the intersection of retail and technology, a diverse set of business experiences that give him a unique perspective, and a track record of successfully driving a change agenda at scale,” Gennette said in announcing his hiring.
Driving more online shoppers into Macy’s stores is key to the department store chain’s revenue growth plans.
Gennette told analysts on the retailer’s second quarter 2017 earnings call earlier this month that online shoppers generally spend an additional 25% when they pick up an online order at a Macy’s store. To help push such sales in the back half of 2017, Macy’s is moving its online order pickup to the main entrance of its store locations so it’s more convenient for an online shopper to pick up her order. Macy’s also is testing an initiative called Shop Your Store, which will give an online shopper greater visibility into local store inventory when shopping on Macy’s e-commerce site or its mobile app.
Between Lawton’s hiring and other previously announced omnichannel initiatives such as ship from store and Shop Your Store, Macy’s is trying to adapt its store fleet to the digital age and Lawton’s appointment shows Macy’s is committed to adapting to “dramatic changes” in the retail industry, wrote Dana Telsey, CEO of research and consulting firm Telsey Advisory Group.
However, Telsey notes that the retailer’s commitment may not be enough for it to succeed. “Macy’s remains somewhat of a show-me story as strategic initiatives around merchandising and the shopping environment, both in-store and digital, have yet to show a meaningful impact” on sales, she wrote.
Macy’s and other mall-based retailers face a declining customer base, a drop in foot traffic in malls and deeper discounts by competitors. While Macy’s sales last quarter fell less than Wall Street had estimated, the results didn’t sit well with investors, who drove the stock down, signaling concern that department stores aren’t likely to emerge from an industry slump anytime soon.
Bloomberg News contributed to this report.
Favorite