Macy’s Earnings Call Nuggets: Superstorm Sandy and Online Business
Charles Grom – Deutsche Bank: Just on Sandy when you look back at some of these prior mega storms that have hit different parts of the country, do they tend to postponed sales all together or does the consumer curtail purchases all together and kind of what’s your expectation for the next couple of months here?
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Karen M. Hoguet – CFO: It’s a complicated question. We think some of it is lost, most is postponed and in some cases, unfortunately it creates new demand for goods given destruction. It’s a question of the timing. One thing different about this hurricane then Andrew or Katrina it’s frankly more like Wilma which was a lesser impact but closer to the holidays. So, we’re trying to look at that and how the business rebounded. Burt frankly, this is hitting a far more densely populated areas. So, we’re sort of looking day by day and seeing what happens.
Charles Grom – Deutsche Bank: That makes sense, living through it myself. Just separately on the Internet strength relative to your comp guidance in the fourth quarter. It looks like it continues to grow. Are you assuming that that trend will continue and that your fourth quarter comp guidance assumes about half of that’s going to come from online?
Karen M. Hoguet – CFO: We don’t split the guidance that way, but our dotcom business is doing very well and gaining incremental growth, now that it’s able to pull inventory to satisfy demand from these 292 stores. That’s the strategy for the Internet.
Charles Grom – Deutsche Bank: Can you just remind us the basket size delta between brick-and-mortar and online also how the merchandise margins looked between both?
Karen M. Hoguet – CFO: In terms of the average order or the average transaction, it is higher online, but I don’t have the specific numbers in front of me. In terms of margin, it is higher online as it has been, so that’s obviously good for the business as well.
Paul Swinand – Morningstar: Glad to hear that you’re getting back to normal. Hope everybody is safe. First question, just talking about the online business. Are you noticing any acceleration of buying where customers are closer to stores or is more of the growth coming from people that are outside of store areas, maybe discovering or rediscovering the brand?
Karen M. Hoguet – CFO: In the case of Bloomingdale’s where we have fewer stores, our best online customers do live near the stores. So there has been some growth in other markets, but it’s really more coming from the markets where we currently have stores. In the case of Macy’s, because we have so many stores it’s much harder to tell.
Paul Swinand – Morningstar: Any regional comments…?
Karen M. Hoguet – CFO: As online customers are going to be the ones that are also nearby a store.
Paul Swinand – Morningstar: Any regional comments on driving the online, is it more city based or urban based where people have better Internet connections or?
Karen M. Hoguet – CFO: I have not looked at that. So, I don’t know.
Paul Swinand – Morningstar: Then I wanted to ask about one of your prepared remarks. You said that you’re going to be flowing more inventory in the fourth quarter, and I was wondering, it seems like I’ve been hearing retailers say that for years and years. Is there a reason that you flowed less last year, now you’re lapping a different flow strategy than last year?
Karen M. Hoguet – CFO: Well, we’ve consciously tried to bring more goods into the stores, to help us transition to the spring and have more new nets as Christmas approaches and for our post-Christmas strategy. So, it is a conscious change from what we’ve done in the past.
Paul Swinand – Morningstar: Is there anything structural or anything technology or anything in the way you – in your strategy that has enabled you to do this better this year or it’s just a switch in what you want to do?
Karen M. Hoguet – CFO: Frankly, it’s a decision. That is, if we were taking input from sort of our My Macy’s team, a lot of it came back, but we didn’t have enough new net as we went through the quarter particularly in December and for the fifth week of December, which as everyone knows has become very important.
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