Macy’s says sales getting a boost from its Backstage outlets

Macy’s delivered better-than-expected holiday sales, saying business got a boost from its fast-growing Backstage department that sells off-price goods.

The shopping-mall anchor said Tuesday that comparable sales grew 1.4 percent in the most recent quarter while revenue rose 1.8 percent to $8.67 billion.

That’s “a significant trend change for us,” CEO Jeffrey Gennette said on a Tuesday call with analysts. Macy’s hasn’t seen comparable sales rise on an annual basis for three years, but Gennette said he’s committed to “returning Macy’s to comparable sales growth in 2018.”

A big driver of the growth will be Macy’s Backstage departments, where it sells deeply discounted merchandise that didn’t sell quickly at full price. Backstage competes with off-price chains like TJ Maxx, Marshall’s and Saks Fifth Avenue’s Off Fifth outlets.

Currently in 45 of its 670 stores, Macy’s is planning to roll out another 100 Backstages, including in some of its premium malls, Gennette said.

Stores with a Backstage in them have seen sales rise as much as 7 percent.

“Our existing customer is spending more when you have a Backstage in that building,” Genette said, adding that shoes and home goods were among the biggest sellers.

“If you go to a store that has a Backstage, the rest of the store looks so much better because it is not junked up with a bunch of merchandise that’s on sale,” said Jan Rogers Kniffen, chief executive of World Wide Enterprises, a retail consultantcy.

For fiscal 2018, Macy’s said it expects comparable sales to be flat to up 1 percent, and total sales to be down between 0.5 percent and 2 percent.

Macy’s also said it inked a deal to sell the top floors of its State Street store in Chicago for $30 million and is exploring selling a chunk of its Union Square building in San Francisco.

Macy’s shares on Tuesday rose 3.5 percent to $28.40.