Macy’s used its savings from 2018 tax reform to create a “path for growth,” CEO Jeffrey Gennette told CNBC Thursday.
The message came in response to Jeff Bezos’ challenge that retailers match Amazon’s employee compensation.
“We decided to put that back into the community of our colleagues,” Gennette told Jim Cramer in an interview on “Mad Money.” “Every single colleague — all 130,000 — [got] a quarterly bonus as a result of the production of that store [or] that call center.”
Bezos, Amazon founder and CEO — who is also the world’s richest man — called on competitors in his annual shareholder letter Thursday to match the company’s $15 minimum pay and benefits. Gennette said that Macy’s understands that “culture is everything” in the workplace and that the company must take care of its staff.
“This is something we are hyper-focused on,” he said.
Macy’s is also focused on transitioning its stores to reclaim patrons it lost to online shopping, such as Amazon. Gennette said it’s critical that retail stores evolve into centers where customers can spend time and not just their money.
The shopping mall stalwart has carved out about 1,500-square-feet of space at dozens of locations to introduce Story, the New York merchandise curator that Macy’s bought about a year ago. The concept was founded by Rachel Shechtman to design design a catalog of items based on a theme that changes every two months.
“Brick-and-mortar needs to go from a place of transaction to a place of experience,” he said in a Thursday interview with “Mad Money’s” Jim Cramer. “Story is one of our first steps in really doing that at scale.”
The idea is to complement longstanding experiences that Macy’s offers, such as the annual Thanksgiving Day Parade in New York City and other special events, Gennette said. As opposed to piloting the new Story model in a handful of locations, Macy’s got it running in 36 stores in eight months, he added.
“That’s the speed that we’re now trying to work at in the company,” Gennette said. “This thing could scale to a lot more doors and … [which] is really where I’m focused, so I’ve got many new mechanisms by which I can bring experiences and involve all five senses into our building.”
Macy’s has also made moves to get its balance sheet in shape. Management has worked to shave $2.5 billion off the company’s debt in the last four years, Gennette said. He also said leadership is in discussion to buy back stocks in the future, along with its plans to reinvest cash into the company.
Macy’s has a “funding the future” plan with four growth pillars in same-store sales, market share, franchise health, and profitability, Gennette said. Going forward, Macy’s wants to avoid the problems that plagued holiday sales in its fourth-quarter earnings.
“We’ve got all these efficiencies and productivity buckets that we’re playing with, because we’re going to keep growing the top line, but overtime, we’re going to show how we’re going to grow the bottom line as well,” he said.
Disclosure: Cramer’s charitable trust owns shares of Amazon.
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