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Cramer: Macy’s Hyper-Local Strategy to Drive Sales

Thursday, 27 Jun 2013 | 6:46 PM ET
Macy's CEO: Will Continue to Open Stores Where Makes Sense
Thursday, 27 Jun 2013 | 6:15 PM ET
Mad Money host Jim Cramer speaks to Macy's CEO Terry Lundgren about catering to the local customer, his love for omni-channel retailing and its joint venture with Finish Line.

It appears the US economy is getting itself back on solid footing. New information released on Thursday showed the number of new jobless claims fell while consumer spending increased last month.

On Wall Street pros interpreted the data as two more signs that the outlook for many Americans has started to improve. But will that translate into greater profits for Macy's?

After hearing from Macy's CEO Terry Lundgren, Cramer believes it will.

The Mad Money host thinks Macy's has a tailwind that retailers such as Coach, Ralph Lauren and many others do not have. That is, Macy's derives the lion's share of its sales domestically.

And according to Lundgren Macy's is much more than a US focused retailer – it's hyper local retailer, largely via an initiative called My Macy's.




Terry Lungren, CEO of Macy's
Adam Jeffery | CNBC
Terry Lungren, CEO of Macy's

That is, Macy's has people living and monitoring 69 cities around the country, "and they're guiding the decisions we make – they're determining what we sell and how it varies location to location," Lundgren said.

For example, a size or color or style that may not sell in Memphis may sell quite well in Massachusetts. Rather than take a one size fits all strategy, Macy's now tailors its merchandise store by store.

"And that translates into increased sales, profitability and cash flow," said Lundgren.

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"Macy's is the only national store doing this", Cramer said. "Other chains want all their stores to be absolutely the same; only Macy's understands that they'll do better if they're slightly different."

In fact, Macy's has become such an expert at the cities and regions it serves that the White House will sometimes ask the company for insights.

"We are regularly contacted by the White House for a heads up on how the consumer is performing," Lundgren admitted. That suggests to Cramer that Macy's strategy is spot on. "It's a fabulous story and a fabulous stock," he said.

(Click to see video)

Call Cramer: 1-800-743-CNBC

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