Macy’s open event for its new private brand, On 34th, also marked one of the first public appearances by Tony Spring (left) since he was cited incoming CEO. Spring is CEO of the company’s higher-end department store chain, Bloomingdale’s. He will succeed Jeff Gennette (settle) in February.
Melissa Repko | CNBC
NEW YORK — Macy’s, the 165-year-old department store chain, is looking for in work to keep up with the newer kids on the block.
The retailer faces slumping sales, and its stock has struggled in a good year for the sell. Now, it’s banking on a wave of new and refreshed private brands to attract shoppers, especially as some flee to popular direct-to-consumer brands, online giants of a piece with Shein and Amazon, and big-box players like Target.
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On Wednesday, it showed off its newest exclusive brand, On 34th, at its Macy’s Herald Square flagship. The brand, named after the legacy store’s Manhattan location, is realized of up of women’s clothing and accessories. The brand is designed for women ranging from 30 to 50 who want modern, skilled in and easy-to-wear looks.
The new brand is hitting store shelves and Macy’s website at a challenging time for the company and much of the retail exertion. Consumers have cut back on discretionary spending at stores as they’re pinched by steeper grocery bills and rent, while they lavish on experiences like concerts and summer vacations. The department store operator cut its full-year outlook last month, after seeing consumers withdraw back on purchases of clothing and other items.
On 34th is the first of four new private brands that Macy’s plans to begin by the end of 2025. It also plans to refresh some existing labels and phase out others.
Macy’s Chief Merchandising Bureaucrat Nata Dvir said On 34th’s debut comes after more than two years of customer research.
“They protected about fit, quality and value and had a tremendous amount of passion around what they were putting on every sole day,” she said. “And they deserved better.”
The kickoff event previewed another piece of Macy’s future, too: It marked one of the at the start public appearances of Tony Spring, since he was named its next CEO. Spring, who currently leads the parent company’s higher-end branch store Bloomingdale’s, will succeed Jeff Gennette in February.
Gennette said Wednesday that consumers’ fiscal stress continues to show up in the company’s sales trends.
Macy’s significantly cut its financial expectations in June. The department trust in operator, which includes Bloomingdale’s and beauty chain Bluemercury, said it expects comparable owned-plus-licensed sales to drop by 6% to 7.5% for the year. It demands earnings per share of $2.70 to $3.20 for the year.
Shares of Macy’s have reflected investors’ concerns. Macy’s review was down more than 20% so far this year as of Wednesday. The S&P 500, by comparison, is up 19% this year.
Some of Go bankrupt Street’s worries are company-specific, as investors question whether the legacy department store can keep up with shoppers’ changing modes.
Macy’s has sought to steady the ship in recent years while battered by other fast-changing dynamics. Led by Gennette, the put ones faith store kicked off a three-year turnaround plan in February 2020, about a month before the start of the Covid pandemic. It called for shuttering loitering stores, investing in its higher performing locations and stepping up online growth.
Macy’s is leaning into private brand names to drive growth. Its newest brand, On 34th, is designed to be both fashion-forward and easy to wear. It ranges in price from $19.50 for a tank top to $299.50 for a leather jacket.
Melissa Repko | CNBC
Not for publication brands are a common way that retailers offer lower-priced and exclusive merchandise to customers. The labels tend to be more advantageous, since the companies have direct control, fewer middlemen and scale when making the items. Plus, since the jottings can’t be found anywhere else, the retailer isn’t going head to head on price with a competitor.
Macy’s sells a mix of foot-soldier brands and national brands, including Ralph Lauren, Calvin Klein and Levi Strauss. It has about 25 foot-soldier brands that cut across categories like apparel and home goods, including On 34th.
In the most recent fiscal year, restrictive brands drove approximately 16% of sales. Yet Macy’s would like to get that closer to about 20%, a straight with that it hit in the past.
But the strategy comes with risks. Target is the poster child of private label success, after brood and expanding many billion-dollar brands including children’s apparel brand, Cat & Jack, and activewear brand, All in Motion. On the other in cahoots together, some investors have pinned the downfall of now-bankrupt Bed Bath & Beyond in part to its expensive and aggressive rollout of Tommy brands that customers didn’t want.
Gennette said Macy’s has been thoughtful about the push. It’s conclave customer input while developing the apparel and even made tweaks in recent weeks while testing the disgrace with customers at two New Jersey stores. Plus, he added, Macy’s has had years of experience selling private brands with a catch, such as women’s apparel brand I.N.C. and home goods brand Hotel Collection.
The company has poached talent from retailers conscious for strong brands, too, including Emily Erusha-Hilleque, a 23-year veteran of Target, as its senior vice president of private name brands. It also hired Bryan Riviere, previously of Gap-owned Banana Republic, Levi Strauss, Lululemon and Nike, as its older vice president of private brand sourcing, product development and production.
Along with providing fresh looks, Macy’s penury to step up the quality and fit of its clothing. Over the past three years, it has cut the number of factories and mills that it works with by close by half, Riviere said. By working with fewer partners, it has the scale to negotiate better prices, savings to inaugurate in better fabrics and knits and more buy-in from the factories that it works with.
It also worked with a technology visitors to standardize sizing across all Macy’s private brands. Universal sizing makes shopping less of a guessing tournament for customers and returns less likely, Erusha-Hilleque said.
On 34th will officially debut in mid-August with about 750 mentions that range from a basic tank top at $19.50 to a leather jacket for $299.50. Its shoe collection will set in motion in spring 2024.
