Macy's, Inc. (NYSE:M) Q2 2020 Earnings Conference Call - Final Transcript
Sep 02, 2020 • 08:00 am ET
categories that are in demand; home, particularly housewares and textiles, as well as fine jewelry, fragrances, activewear and sleepwear. We also continue to see softness in men's tailored and dresses, which is indicative of the work-from-home world in which we now live as well as slowness in luggage due to greatly reduced travel.
At Bloomingdale's, home and accessories were the strongest performers. Housewares drove the home trend, followed by textiles and table tops. Handbags, fine jewelry and women's shoes were also among the best performers. As with the Macy's brand, apparel continues to be challenging in both men's and women's.
Interestingly, we believe we are benefiting from the current move away from spending on experiences towards spending on products, especially within luxury. From textile to shoes, to handbags, to mattresses, to diamonds, luxury proved to be strong across almost every category of the Bloomingdale's business, significantly growing its penetration of the business year-over-year. Given our strength in this area, we are leaning harder into luxury in order to capitalize on the shift in spending.
And at Bluemercury, bluemercury.com experienced a 105% sales growth in the second quarter and we saw our total web customers grow by more than 50% year-over-year with the strongest growth in May, moderating each month thereafter as retail locations began reopening.
Turning to off-price, in the quarter, Backstage performed better than our main boxes, but still saw sales erosion of nearly 45% due to closures. We took appropriate markdowns during the quarter to clear through seasonal merchandise in Backstage into the third quarter in a clean inventory position. The sales recovery is expected to improve in the third quarter as we lean into stronger trends in home, casual and basics.
We generated credit revenue in the second quarter of $168 million, down $8 million versus last year. Our proprietary card penetration was down 590 basis points in the quarter at 40.8% this year compared to 46.7% last year. This year-over-year decline was largely due to a recent shift by consumers to debit card and cash, which appears to be tied to economic stimulus and unemployment checks they deposited directly into consumer bank accounts or loaded onto prepaid bank accounts.
In addition, we derive about 85% of our new accounts from customer's face-to-face engagement with our store colleagues. As a result, with the majority of our stores opened for only a portion of the quarter as well as reduced in store traffic once the stores reopened, new accounts were down significantly in the second quarter of 2020 versus the second quarter of 2019.
Gross margin was 23.6%, down more than 15 percentage points from last year, but up significantly from first quarter's 17.1% as retail margins benefited from good sell through of clearance merchandise as well as an improved mix.
In fact, not only did we sell through our clearance merchandise much faster than we did in the first quarter, but we also sold through our regular priced merchandise at a faster pace. As a result, and