White Plains, New York, USA
Key takeaways
- Bloomingdale’s has named its new CEO, Frenchman Olivier Bron, to take over from Tony Spring
- Spring will move into a new role as parent company Macy’s CEO, with Jeff Gennette set to retire next year
- Macy’s stock climbed as much as 2% at the new CEO news – the share price has cratered 42.5% so far this year
Macy’s-owned Bloomingdale’s has tapped Frenchman Olivier Bron to be its next CEO after a changing of the guard at the parent company. The move comes as Bloomingdale’s has suffered falling sales and footfall thanks to the macroeconomic environment, which is seeing the retail sector struggle for its life.
The move breaks a decades-long chain of hiring internally for Bloomingdale’s CEOs, so perhaps the luxury department store is looking to switch things up with this latest executive hire. With the global luxury market only gaining momentum in the post-pandemic era despite the rest of retail slowing down, an international CEO makes a lot of sense.
Here’s the lowdown on the man taking up the top job at Bloomingdale’s and the long-term potential for the department store chain for investors.
Who is the new Bloomingdale’s CEO?
Olivier Bron has been announced as upscale department store Bloomingdale’s new CEO, replacing veteran Tony Spring, who became CEO-elect of the parent company Macy’s back in March. Macy’s CEO, Jeff Gennette, is retiring in February next year.
French national Bron has deep experience in the retail sector, having been the CEO of Central and Robinson department stores in Thailand for the last two years. Before that, he was COO of the luxury department store group Galeries Lafayette (basically the fanciest store in France). He’s expected to start the new role in November.
It’s the first time since 1991 that Bloomingdale’s has hired an outside executive for the CEO position. Of the appointment, Bron said he was a “long-time admirer of the brand” and that he “looked forward to building on the team’s momentum across Bloomingdale’s, including new store formats and continued digital expansion”.
Spring commented Bron’s “extensive international retail career and deep knowledge of the luxury market will be invaluable as we pursue additional opportunities for growth”.
Bloomingdale’s and Macy’s latest financial performance
Born joins the company at a difficult time for the retail industry in the U.S. Bloomingdale’s and its parent company Macy’s haven’t been immune to the economic slowdown and pullback on consumer spending. In its latest quarterly earnings report, Macy’s recorded adjusted earnings of 26 cents a share, down from last year’s result but still better than Wall Street’s prediction of 14 cents a share.
Sales told a similar story, falling 8% from last year to $5.13 billion but still surpassing analysts’ consensus estimates of $5.07 billion. Comparable-store sales dropped across Macy’s and Bloomingdale’s locations by 9.2% and 2.7%, respectively, as customers bought fewer handbags, men’s clothing and dresses. However, Macy’s beauty brand Bluemercury saw same-store sales rise by 5.8%.
In a sign of the times, credit card delinquencies increased as Macy’s “other revenue” category declined by $84 million. The company said the loss in credit card revenue “was faster than planned” since the first quarter.
However, Macy’s reaffirmed its financial forecasts for annual sales and earnings, with the department store chain expecting net sales of $22.8 billion to $23.2 billion and earnings between $2.70 and $3.20.
What’s on the cards for Bloomingdale’s under Bron’s leadership?
Hiring an outside international CEO does imply Bloomingdale’s wants to focus more on growth and breathe new life into the company. The days of the massive brick-and-mortar department store are likely numbered, so the high-end chain is focused on diversifying its real estate.
Bloomingdale’s has experimented with opening smaller branches, called Bloomie’s, with two already open and another planned in Seattle – a new market for the company. The brand also has 20 outlet stores open across the U.S.
Macy’s has also tried to modernize its offering by introducing its own-brand, more affordable label, On 34th, in July. The brand, which sells women’s clothing, is one of four private brands Macy’s is launching by the end of 2025. The company is also switching up its existing label brands line-up, including adding Under Armour and Nike back into the fold to benefit from the rise in athleisure.
The global luxury sector is gaining strength
In terms of its international reach, Bloomingdale’s has locations in Dubai and Kuwait. With a CEO with international luxury experience at the helm, it’s a no-brainer to expand the brand’s reach into new markets like Europe and Asia.
Although the luxury sector in the U.S. is flagging, the global opportunity is one Bloomingdale’s will be keen to capitalize on. This year, a June report from management consultancy Bain found that the global luxury market is set to grow by between 5% and 12% year-on-year in 2023.
The global luxury market is expected to hit between €360 and €380 billion in value in 2023 alone, up from €345 billion last year. Bain predicts that steady growth will see the sector hit €530 and €570 billion by 2030 – over double its value from 2020.
Key growth regions are expected to be Europe and Asia, especially if China’s economic recovery gets started after the slump it’s seeing. Hong Kong and Macau have already seen an increase in luxury spending since China reopened after lockdowns, and the report predicts Japan also to be a rising star. That’s some serious potential for Bloomingdale’s new CEO to tap into.
How did Wall Street take the news?
Parent company Macy’s share price was up as much as 2% higher during Tuesday trading after the news broke but only ended up closing 0.6% higher at $11.56.
The stock price may also have been aided by venture capital firm Appaloosa LP increasing its position in Macy’s by 0.8% during the first quarter, according to a new SEC filing. Macy’s now comprises 5.5% of Appaloosa’s portfolio and is its seventh-largest holding.
The stock has had a rough ride so far in 2023. It’s lost 42.5% of its value since the start of the year; even though Macy’s beat expectations with its latest quarterly earnings, the share price still fell 10% at the time as pessimism about the retail sector sank in. In comparison, the S&P 500 has gained 16.7% this year.
The bottom line
Bloomingdale’s decision to appoint an international outsider clearly indicates the company wants to do things a little differently. It’s a strategy that makes sense, given the flagging retail opportunity in the U.S. – but it works out even better when you factor in the global luxury market and the opportunities there.
Investors seemed relatively optimistic about the new CEO, as well, which is a good sign that Bloomingdale’s and Macy’s are on the right path with making changes. If the brand can be brave and enter new markets successfully, there’s a lot of potential for Bloomingdale’s long-term stock growth.
