Macy’s 2020

[storewanderer]

HL is designed for the type of shopper that is in the middle of the country, not NY/LA. That shopper is either elderly or has a large family, and shopping is a thing done for pleasure and looking for bargains and unique items. That is not your typical California shopper.

Actually, their #2 state is California now. The only place they have more stores is Texas. And their highest volume stores are all in Los Angeles county.

I think Hobby Lobby's success in CA has been a surprise to all parties involved. I think the initial locations they selected rather strategically but they managed to draw in customers from a wide radius with big stores/big selection. They also seem to have adopted a real estate strategy that brings their operating costs down and have successfully found spaces using that strategy.

[storewanderer]

I don't know why you have to resort to anecdote when the financials have been up for awhile and they are pretty abysmal:
https://www.cnbc.com/2023/06/01/macys-m ... -2023.html

Dillard did well during COVID, but they're doing almost as badly: https://finance.yahoo.com/news/dillard- ... 00174.html Macy has been able to cut inventories, but they're inching up at Dillard's, whose pre-COVID trend was clearly downward in terms of comparable sales and profits.

BTW, Macy's, Nordstrom, etc. don't need to expand geographically, because they're in virtually all the markets where they can plausibly compete. Dillard's is a regional, so it's lack of major market expansion is more notable. Macy's has been opening new stores, just not many of them. Their margins have dropped and they keep rebuying shares to pump up the dividend income to the Dillard family. My guess is that like Belk's, they'll eventually sell to private equity---if they can keep inflating the dividend, it might take a new generation of the family to do that. But owning a lot of depressed mall real estate probably doesn't help.

Forbes has a loopy take on Macy's, speculating that Target, among others, might want to buy them, which seems pretty unlikely: https://www.forbes.com/sites/walterloeb ... b2bff86125

The Macy's Q1 financials you are referencing are from a period ended in April. As you may know the department store business operates on a seasonal basis, Q1 is typically the worst/most difficult quarter, and specifically in the case of Macy's whenever they have a bad report they always give a bunch of initiatives they plan to roll out to stem their losses in sales, etc. and paint a positive picture going forward.

So looking at what a store looks like in late July 2023 should be a store that is quite different from April 2023 as the earnings report you cite referenced. There should be new summer merchandise now and perhaps even some fall items rolling in, not to mention back to school/college items.

I highly doubt Target would take over Macy's. Why would they? What does Macy's bring to the table for Target? Macy's is going to focus more on private labels going forward to help their profits. Target already has their own private labels (and probably a lot more profitable of a program than Macy's for those private label items). If Target wanted mall spaces at this point they could just go into other vacant boxes since so many malls have vacant anchor spaces or other ways to squeeze a Target in if Target wanted into a mall badly enough.

I think Dillard's will keep on doing its thing. The strange thing is Dillard's Stock was $30 back at 3/1/2020 and now it is 7/24/2023 at $315 per share. I don't know but frankly if some private equity showed up and was willing to pay $315+20% premium or whatever per share for Dillard's I think it would be awfully tempting to go ahead and sell out... Clearly there are a lot of private equity types who would love to get control of Dillard's, pump the thing up with debt, do a bunch of real estate sale-leasebacks, and pay themselves and their banking friends giant dividends/fees. How is that really any different from the founding family just keeping the company debt free and paying themselves dividends? I guess the banks make less money. I don't see how it is a bad thing that Dillard's is remaining independent/family controlled/debt free and the longer it continues the better.

[ClownLoach]

HL is designed for the type of shopper that is in the middle of the country, not NY/LA. That shopper is either elderly or has a large family, and shopping is a thing done for pleasure and looking for bargains and unique items. That is not your typical California shopper.

Actually, their #2 state is California now. The only place they have more stores is Texas. And their highest volume stores are all in Los Angeles county.

I think Hobby Lobby's success in CA has been a surprise to all parties involved. I think the initial locations they selected rather strategically but they managed to draw in customers from a wide radius with big stores/big selection. They also seem to have adopted a real estate strategy that brings their operating costs down and have successfully found spaces using that strategy.

Their secret is that they don't focus on the best locations, rather the cheapest possible as long as they're at least 45K square feet (although I heard they took a few slightly smaller stores just over 40K as a test). They seek out problem locations that had anchor agreements and the landlord can't fill them. Let's say the old anchor, a Kohl's, paid $100K a month. They closed, but now the landlord is being forced to take $200K a month in rent concessions from all the other tenants because the required anchor is closed. So landlord is losing $300K in rent. Hobby Lobby calls and says "we will take that dead Kohl's, but we will only pay you $20K a month. We want only a ten year term with 5 year extensions after that. Oh, and you can't boot us out unless you're demolishing the site but we can leave at ten years with no penalty if we find a better place around town. We know you're losing $200K in concessions, so even though we will only pay $20K your income goes up $220K a month. And we know you're hurting for money, so we don't want much in landlord contribution other than paint outside, working HVAC and a good roof. We will bring our in house construction team to do the rest." Unless someone else is potentially interested in the site the landlord is basically forced into the deal. What were white elephant type Kmart, Mervyns, Kohls and Sports Authority boxes worked perfectly for Hobby Lobby because they were cheap. The search I did for store count indicated that in most of their markets they have one store for about every 250K people, but in California it's one per 600K. So even though there are less "traditional Hobby Lobby customers" in California there are also far fewer of their stores which balances it out. They seem to be done adding locations in LA, OC, and SD now too plus closed one in OC where they put too many on top of each other around Santa Ana/Irvine. So they'll retain their current one per 600K in the larger, more expensive to operate markets which means they're going to keep doing pretty well.

[veteran+]

HL is designed for the type of shopper that is in the middle of the country, not NY/LA. That shopper is either elderly or has a large family, and shopping is a thing done for pleasure and looking for bargains and unique items. That is not your typical California shopper.

Actually, their #2 state is California now. The only place they have more stores is Texas. And their highest volume stores are all in Los Angeles county.

I think that the Macy's in Dadeland Mall in SW Miami Fl. may also be a very high volume store (at least it was).

[storewanderer]

I think that the Macy's in Dadeland Mall in SW Miami Fl. may also be a very high volume store (at least it was).

Dillard's also does very well in Florida. It has about 10% of its stores in Florida. Although Dillard's does not directly operate in Miami, its nearest store to Miami, in Pembroke Pines, is a very high volume store. Macy's has a very solid lock on Miami and the immediately surrounding cities.

The few full service Nordstrom units around Miami also do very, very well.

[Romr123]

Florida (specifically Miami) has similarities on a far larger scale to border cities all over the country--San Diego/Blaine WA/Buffalo/Port Huron, MI/Calais ME all have more retail than they deserve because of the cross-border shopping.....Miami has that on steroids. With it being the AA hub, every visitor from Latin America does major shopping before heading home (hence boosting both malls as well as Macys/Bloomingdales and Nordstrom/Neiman/Saks/Dillards). 20 years ago worked for a company that was located in Florida and had customers throughout the LATAM region. We brought folks in to Florida (Tampa and/or Miami) multiple times and we never could give them enough time at the mall.