Macy's and Capri Holdings CEOs update investors on turnaround progress at Goldman conference

Macy's Inc. chief executive Tony Spring and Capri Holdings chief John Idol both addressed investors on the second day of Goldman Sachs' annual retail conference on Tuesday, giving progress reports on two of fashion's most closely watched turnaround plans. Spring called his effort, the Bold New Chapter, a working strategy. Idol described his as still in its early innings.

Spring said Macy's has closed underproductive stores and rolled out its reimagined store programme in three waves: an initial 50 doors, then 75 more, then another 75 on top of that. Nine of the last ten quarters, he told investors, those reimagined locations have posted sales growth.

He compared the rollout to a recipe with every ingredient added at once, which raised its complexity. Macy's needed better merchandising and merchandise presentation, he said, plus improved storytelling, upgraded fitting rooms and more staff placed specifically in handbags, shoes and fitting-room roles across stores.

Spring framed the plan around three original goals and said each is now being met. The customer experience is far better, he said, the luxury brands are growing with what he called unique market positions, and the company is delivering packages faster and at lower cost than before.

How the reimagined stores are performing

The Bold New Chapter was launched two and a half years ago and has since reshaped where Macy's puts its investment. The plan narrows the retailer's focus to its strongest locations and pushes growth harder at Bloomingdale's, its higher-end sister chain, alongside the core Macy's banner.

We covered Bloomingdale's posting record second-quarter sales volume as Macy's Inc. took market share from Saks, a result that is inside the same reimagined-store strategy Spring described to investors this week. We also reported Macy's and Vince both raising their full-year outlook after a strong second quarter.

Capri Holdings arrived at the conference further behind in its own turnaround, having lost time during Tapestry Inc.'s failed attempt to acquire the group. Since that deal collapsed, Capri has sold Versace outright and turned its attention to reviving Michael Kors and Jimmy Choo, its two remaining fashion brands.

What Idol says has gone wrong at Michael Kors

Idol took a broader view of luxury cycles before turning to specifics. Brands go through moments, he said, where their product falls off trend and loses the consumer's attention. He placed Michael Kors in exactly that position roughly eighteen months ago, before the current repositioning began.

Idol pointed to visible progress across three areas. Between marketing, product and the in-store experience, he told analysts, the tangible results are there and happening for the business, though he was careful to frame the company as still early in a longer repositioning effort.

The most concrete step Idol described is a retreat from price promotions, which lift sales in the short term but damage both margin and how consumers perceive a brand. Capri has been cutting clearance and markdown stock hard, and he said the effect on the coming quarter will be significant.

Michael Kors ended last quarter with inventories down almost 27% compared with the prior year, according to Idol, and the brand now carries 50% less clearance and markdown stock than it did twelve months earlier at the same point in its calendar.

Idol called the shift a big step, telling investors it lets Capri say to the consumer that Michael Kors is now a full-price business and that shoppers will see far less of the discounted product that has defined recent years. He then called the coming period the most painful full-price quarter Capri has faced.

We hold background on the group's brand portfolio and its recent history of consolidation and divestment, which frames why Idol is now presenting Capri as newer to the turnaround process than Macy's.

The two executives offered contrasting timelines rather than a shared script. Spring's plan is two and a half years old and already showing repeated quarterly gains across its reimagined stores, while Idol's repositioning is still working through the inventory overhang left by its promotional past.

Neither executive gave investors a date by which their respective plans would be judged complete. Spring's comments suggest Macy's will keep expanding the reimagined-store programme beyond its current count of roughly 200 doors, while Idol's warning points to Capri's next reported quarter as the test of its full-price strategy.

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