It is time for the new CEO of Macy’s Jeff Gennette to take over the reigns of Macy’s. While the prior CEO did decently well through the recession, he failed to improve upon the company as a whole.

The growth of the company has stalled. Discount retailers have been major competitors for the company. Online retailers like Amazon continue to beat down brick and mortar stores like Macy’s.

Declining Growth

Macy’s (M) has been struggling big time as a retailer. Awhile ago it reported earnings that were mixed in nature. It reported that it had obtained an EPS of $2.02 per share. That was a beat on the earnings per share, but sales continue to plunge.

It had reported revenue of $8.52 billion. Much lower than the expected number of $8.62 billion. The lower than expected sales continues to weigh heavily on the stock. In the beginning of the year, Macy’s forecasted that sales would dip between 3.2% and 4.3%.

It is even on the verge of closing up to a total of 100 stores over the next few years. One thing the new CEO Jeff Gennette will implement to boost sales is to improve coupons. Coupons have been a new item that Macy’s has dabbled with.

Instead of offering a percentage discount off an item, the coupon will be a straight off dollar amount. For instance, it could offer a $10 or $15 dollar off coupon for any item in the store. Jeff’s hope for the coupon change is that it will drive more traffic to the store.

Major Competitor

There has always been a major problem for Macy’s in the retail space. That is the competition stemming from discount retail stores such as T.J. Maxx. These types of discount retail stores have been eating away at Macy’s market share. Which is a big reason why sales have been on the decline.

Gennette’s approach for boosting sales would be to become more of a hybrid retailer. That means the goal is to implement exclusive merchandise. That could bring in those customers that want to buy exclusive only items. Other measures to combat discount retailers is to copy some tactics. As an example, Macy’s wants to change to a self shoe service type of department.

Instead of having employee’s measure shoe sizes for consumers, customers can view all sizes for themselves. Macy’s also states that it will cut some promotions, but not all of them.

Why would it cut promotions at all? The reason is because the heavy discounting has been chipping away at margins for many years now. The company must find a proper balance between discounts and merchandising in order to compete against discount retailers.

Brick And Mortar Troubles

Macy’s along with other retailers face enormous pressure as Amazon continues to conquer the online space. It is no secret that brick and mortar stores are struggling against online retailers.

Macy’s has adopted itself an online presence, but not nearly big enough like Amazon has. Brick and Mortar stores had to cut employees as well as close stores. In addition, they had to focus on building online ordering and pickup at stores.

The problem is that Amazon is still grabbing a majority of online sales growth. It even has the upper hand when it comes to better shipping discounts. To make matters worse, Amazon is getting itself into the brick and mortar business. But again it will have the upper hand.

It wants to implement a concept known as “Amazon Go”. That involves stores that are checkout-free. Meaning the customer can pick up an item at a store and walk right out. Macy’s will have a lot of work to do if it hopes to combat against such new measures.

What Binary Options Traders Should Watch For

Traders should watch a few things.

The first of which would be to monitor how the new CEO handles the growth of the business. Declining sales continue to be a huge burden for Macy’s. Sales must start to climb if the stock is to recover back to its 52-week highs of $45.41 per share.

The second item would be how Macy’s handles discount retailers like T.J. Maxx. In order to build sales, it must be able to fend off these discount retailers. Discount retailers cut prices sharply to get traffic. The problem is that Macy’s can’t discount as much as they do. Otherwise, Macy’s margins will continue to shrink. But it must find a way to improve its margins.

The final item that traders should keep an eye on would be the brick and mortar issue. Macy’s has already closed 36 stores in 2016. It is expected that it will close more this year as well. That should be watched closely. If more stores are closed it will mean less sales for Macy’s. That in turn will affect both earnings and the stock.