Macy's CEO: Unemployment Threatens Retail's Recovery
High unemployment could hinder the retail sector's recovery, despite the recent improvement in same-store sales, Macy's Chairman, President and CEO Terry Lundgren told CNBC Thursday.
"There isn't really anything that I see that's happening in our economy that will suggest that there's going to be big momentum toward job growth," Lundgren said.
Though Lundgren has reservations, he said March's positive sales data are proof that things are getting better for the sector. Macy's has posted positive same-store comparisons for the past four months, most recently reporting a near 11 percent gain in March from the prior year.
"All the arrows are pointing in the right direction in terms of consumer behavior right now," he said.
Macy's used the recession as a way to reorganize its business—for example, consolidating its business to one central buying organization, Lundgren said. What's more, Macy's is now able to assess the popularity of certain colors or sizes at each of its locations, which is especially important in an era of reduced inventory.
"I think that puts us in a great position to be able to satisfy consumers with less overall inventory, but more specifically, inventory they need in their store," he said.
Lundgren said he thinks Macy's stock is fairly valued at about $24, but plenty of upside potential remains. That's because the company's most difficult decisions are now in the past—such as how to cut half a billion dollars in expenses and reduce inventories—and it's back to growing sales.
"All of those combinations I think point to a very different opportunity for the value of our company, and therefore the value of our stock," he said.
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