Cramer: 'Miracle worker' Jeff Gennette will make Macy's turnaround sustainable

  • "Mad Money" host Jim Cramer gives credit to Macy's CEO Jeff Gennette for revamping Macy's and brightening the retailer's outlook.
  • Cramer says Gennette has overshot expectations in less than a year at the helm.

As the buzz around department store giant Macy's comeback grows louder after earnings, CNBC's Jim Cramer backtracked to what spurred the retailer's turnaround in the first place.

"To put it simply, the new CEO, Jeff Gennette, who took over less than a year ago, is apparently a bit of a miracle worker," the "Mad Money" host said on Tuesday. "He's made the stores look better, he's emphasized fashion, he's reinvented their loyalty program."

Cramer credited Gennette for molding Macy's model to fit customers' specific needs. Regular spenders felt slighted, so Macy's gave them platinum-level Star Rewards. Consumers started flocking to off-price retailers, so Gennette bolstered Macy's own off-price brand of stores, Macy's Backstage.

Gennette has also been testing new initiatives like The Market at Macy's, in which Macy's partners with brands to build pop-up shops within its stores.

The result has been an "all systems go" effect for Macy's, Cramer said. Sales of dresses, coats, jewelry, men's tailored clothing, children's shoes and handbags are all outperforming estimates.

Better yet, Cramer argued that the result is sustainable thanks to Gennette's leadership. On Tuesday, the CEO told CNBC in an after-earnings interview that Macy's should return to same-store sales growth in 2018. (Same-store sales growth is a key metric for retailers.)

The retailer is also making strides in omnichannel, offering personal and curated shopping options and, in effect, bracing itself against more hands-off e-commerce players like Amazon.

"Most important, though, is something behind the scenes, something that caused me to recommend the stock when it fell below $20 last year," Cramer said. "I'm talking about the balance sheet."

"Gennette knows fashion. Even his detractors will admit that," he continued. "However, what people missed about him, particularly the bears who questioned the sustainability of Macy's dividend when its stock yielded 7.7 percent, is that Gennette cares passionately about fixing the darned balance sheet."

With Gennette at the helm, Macy's has curbed its share buyback program and turned its focus to paying down its debt by selling property and shuttering the last of its under-performing stores.

As a result, Cramer said the outlook for Macy's, from its gross margins to its sales estimates, has greatly improved. He only wishes investors would have spent less time betting against the chain and more time listening to its new leader.

"Shop there as I have, embrace it, and you'll see exactly what I mean," the "Mad Money" host said. "The bears blinded themselves to all of the positives here in the pursuit of a home-run short, and instead, it turned out to be a home-run long."

WATCH: Cramer applauds Macy's CEO Jeff Gennette after earnings

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram - Vine

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com

Cramer's New Book