Macy's, Inc. (NYSE:M) Q2 2020 Earnings Conference Call - Final Transcript
Sep 02, 2020 • 08:00 am ET
while back, what are the largest changes that you're making multi-year post the pandemic as we think about merchandising assortments and the margin opportunity over time?
Yeah, I think the big thing there is really what is the mix of the business? And when you look at what digital is going to be of the overall business. So that has been a -- we do expect that to be at least 40% of the business moving forward. We're clearly seeing that in 2020 with the door closures, but we think that, forever, is changing the complexion of the business.
And so, feel very good about our digital team and how they're going at that, of where that demand is, how they're responding to that demand, how we're using that data, how we're building the supply chain to take full advantage of that to improve the profitability. So we're expecting higher shipping costs, but we're expecting margin expansion, based on all of what we're doing with personalization and new categories that we're getting into.
We've obviously expanded vendor direct. We're looking at new categories based on what we've learned through COVID. So we have -- right now digital gives us -- contributes to our overall profitability. And we have a clear line of sight about how to grow that over time. So we are -- that's the biggest change, is really what's going on with our digital business.
Great. Best of luck.
Thank you. And now we take our next question from Oliver Chen from Cowen and Company. Please go ahead.
Hi, thank you. Good morning. Regarding what's happening with the product assortment and consumer demand, what are your thoughts on how you've been able to reposition the assortment to what's attractive with at home demand, relative to some of the caution points around apparel?
I would also love your thoughts on, as we approach Black Friday, just more generally, how do you see this evolving and what's within your control that drive a safe yet compelling and value orientated experience? Thank you.
Hi, Oliver. So, one of the benefits of being a department store is the range of brands and products and values that we can offer and we can pivot where the customer takes us. So certainly in COVID, we've seen big changes in the overall merchandise mix. And so it's -- everybody is talking about what's happened with the need for more casual and active and that certainly is the case. But everybody being at home, they're making lots of changes with their home, be it new textiles or new home decor or new furniture or mattresses and that is a department store that gives us opportunities to grow those businesses disproportionately.
So we've added a lot of categories, a lot of categories online and categories in store. When you think about food and beverage, categories there as well. So the mix of the business definitely has changed. So we've added new brands, new SKUs, our