Cowen's Chen: We Are Seeing the Modernization of Macy's (Audio)

gain of six tents of one percent. Naz Stack up thirty also at a record at fifty two thirty four, a gain of six tenths of one percent. Down Industrials at eighteen thousand, six d thirty one climbing a hundred and thirty five points up seven tenths of one percent. Gold down eight thirty ounce now to thirteen thirty nine, a drop of six tenths of one percent. Crude oil up three point nine percent of barrel of West Texas Intermediate root of a dollar sixty four to forty three

thirty five five right now on West Texas Intermediate. I'm Charlie Pella. That's a Bloomberg Business Flash. Charlie Pella, thank you so very much. It's time now for the e t F Report, and it's brought to you by National Realty Providers of one Satisfaction Guaranteed New York City Realty Investments see them at n r I A dot net internet e commerce, online shopping. How can you profit from it? Well,

let's find out. Returning now to our own Katherine Cowry for today's et F report, Globally, retail sales are expected to store past the one and a half trillion dollar marked by that's according to Statista. And yes, there is an et F aimed at tapping into that growth. It's the Amplify Online Retail et F. Taker I b U y or I buy. Christian Magoon, chief executive of Amplify Investments, on why his firm decided to launch the e t

F this year. Even though a lot of people are familiar with online retail sales, it's only seven and a half percent of US total total US retail sales, so we think they're um this this has room to maybe double or triple over the next four or five years, and we've seen research that supports that. Magoon says, there are three types of companies in the e t F.

The largest allocation is traditional retailers. It's about six of the e t F. And these are companies like pet meds UM, companies like Lands and that are doing again seventy or more of their sales from through an online channel. I buy has two point seven million dollars in assets under management and an expense ratio of sixty five basis points. That's your Bloomberg ETF report. I'm Katherine Cowdery. This is taking stock with Kathleen Hayes and Prim Fox on Bloomberg

Radio The world of retail. Taking a look at Macy's today. The shares are higher by more than seventeen per cent. Why while the company announces that it will shut her more than one stores that's about fiftent of its base and cut jobs in order to combat sluggish traffic as well as discounters. Here to tell us more is Oliver chen he Is, managing director and senior retail analystics Kalin and Company. Oliver, thank you for being with us. Tell us about Macy's and their plan to fix what is

a struggling retail empire. Yeah, what happened today in Macy's where the comp store sales were better than feared, so they came out still negative negative two point six, but Street was looking at a negative four point seven, so better than feared combined with very low bar in terms

of the sentiment into the print. So what's happening in retail right now and them there is a bit of a retail revolution because quite simply, the customers have been moving faster than retailers and what customers want and the biggest problem is just getting people to walk into stores. There are so many distractions, there's it's so much easier to shop online now and people have stores on the palm of their hands, so there's a new bar in terms of interesting people in terms of just walking in

the store. So the store traffic is a big problem. And closing one stores was applauded by the Street because that's part of the process as Macy's really tries to focus focus as well as get closed stores which make less sense to them in terms of sales productivity. Um, so we're really seeing a modernization of Macy's on many levels. So Oliver, what will Macy's look like then? Is this the end of you know, the big department stores. We

know it. We know that. Going the other direction, there's been companies like Warby Parkers started out online and they're opening brick, brick and mortar after brick and mortar after brick and mortar. Yeah, Kathleen, I think it's it's really interesting. I mean, our view here at Cowen is the future is bricks plus clicks. So we even see concepts like Warby Parker, you know, open stores and really try to embrace the customer. Macy still has a really compelling assortment.

You really need to touch and feel and get get into the store to understand fashion, and that's a key point. But we have to see Macy's really excite millennials and Generation Z folks who are really interested in looking at Instagram feeds and traveling and experiencing great things that they can brag about online. So Macy's needs to reinvent itself and become a cool, exciting cultural institution again. And that's going to require change. Change with product assortment, change with service,

and change with how customers interact with the store. Shoppers are selfish, We're selfish with their time, and we're looking for value, value as it applies to your time as well. Oliver, I wonder if you could comment about the competition coming from stores such as Zara, h and m Top Shop, Unchlow,

Forever One. They're not closing stores, are they. Yeah. What what we see there is a is a healthier environment and pm UM they have really done a great job the bottom line on a lot of the fast fashionist speed. So we're moving towards this, this generation of continuous shopping, seasonless shopping. You know, I want what I want when I want it, So you're walking into store and you're

seeing collections online and you really want that now. And a lot of those concepts have executed that extremely well with great supply chains. So it's up to retailers like Macy's to to really face that in the form of assortment and speed um and and we're seeing, you know, strength with that because those fast fashion competitors you named offer good speed, good prices, and customers do not want to wear One brand had to tell they're really not

shopping that where anymore. So contrast Macy's two Coals very different response today. Yeah, you know Coals was also it was an inline camp and they guided EPs down so it was all a little better than feared story a little bit different. They don't have as an aggressive as a store a closure plan right now, and it's also going through transformations with with the brand portfolio. But we still saw some nice stock upside at Coals as well and Um. You know, overall today this better than feared

scenario which played out has benefited both stocks. Tell us about Nordstrom that Northstrom perhaps is in a different category, perhaps more upscale. But I'm wondering if you could tell us about Nordstrom and it was founded as a shoe company and it has some of the same issues that

you talk about with Macy's and Coals. What's different about north Trum and what what investors and others should realize is north Trum has a nice portfolio because it was early to online, so we have a nice attractive online mix of business of high teens to it has Northstrom Rack, which is of the business, and then it has the full line. So we see a portfolio of concepts and you can trast that again against Macy's, which is really

just starting an off price concept. And then if you think about retail large, you gotta remember t j X and Ross off price has really been in the sweet spot. So Nordstrom having that portfolio, combined with being a customer first organization, very focused on what customers want, even at the expense of margins, has really helped prepare it for the long term. That being said, there's still problems in retail and we're cautious. Well, Oliver, what the heck can

Macy's do? You just said, oh, they have to do these things. Okay, someone makes you the head of Macy's. What are you gonna do, Oliver, How are you gonna change Macy's to have them compete with online shopping, which is growing all the time. Well, they Macy's is still one of the biggest players in retail, but Amazon is a huge factor with convenience. But Macy's knows Fender as well.

They can get exclusive product made from Macy's. They have a tremendous brand equity and household appreciation, and they have really stronger knowledgement of the situation and a very good management team who's rationalizing real estate. They just have to move fast. They have to make stores fun again. They have to add experiences. What I think they're doing now is pivoting to offer more service. So when you walk into Macy's. You don't really want to see messy piles

of stuff. You want to see someone that really helps you navigate. You also want to have fun. You want to do health and wellness too, So maybe you could exercise in the store. You could get some health and wellness, um juice bar, restaurants, uh, watching an art gallery what I think they could expand it further. I mean, I think there's all these opportunities because the main issue is

this traffic situation. So uh, they have to really offer the consumer kind of double duty and and refocus everybody. In addition to clothing, Does Terry London really have what it takes to turn Macy's around? I mean he goes all the way back to Bullocks and federated department stores. I mean, if you can go back to the nine nineties when Federated at Macy's combined, Uh, that was seen as a way to create a retail juggernaut. We are

excited about management because Terry knows the organization. There's a new CEO coming as well, and they really understand, you know, how to impact the large organization and what the problems are now versus what the future can hold. So Macy's really does face challenges every every three to five years about reinventing itself. A setback is a set up for

a comeback, and they've been aggressive about communication here. We do have a market perform rating on the stock, but I'm I'm cautiously optimistic about what's possible and I'm excited about what what can be possible. Albert Chan, that's a great phrase. I'm going to use that a setback is a set up for a comeback way and implying that do a lot of things in life. At Oliver Chan today, managing director and senior retail analysts from Cowen and Co.

Applying it to Macy's and its management. You can follow Oliver at Cohen c O W E N Research. I'm Kathleen Hayes along with Pam Fox. This is Bloomberg. H