America’s leading fashion retailer to begin
selling on Alibaba Group’s Tmall Global in late 2015
Macy’s, Inc. (NYSE:M) today announced it has formed a
free-standing joint venture with Hong Kong-based Fung Retailing
Limited (a privately-held enterprise; see footnote below) to
explore retailing in China, one of the world’s largest and
fastest-growing consumer marketplaces.
(Editor’s Note: Macy’s, Inc. this morning also issued separate
news releases announcing second quarter 2015 sales and earnings,
and a real estate agreement in Brooklyn.)
The joint venture, which is 65 percent owned by Macy’s and 35
percent owned by Fung Retailing, will start with an e-commerce
pilot. For Macy’s, already a popular destination for
Chinese-Americans and Chinese visitors to the United States, the
joint venture is expected to develop significant new learnings on
customer preferences and buying patterns within China.
Under the joint venture, Macy’s plans to begin selling in China
in late 2015 through an e-commerce presence on Alibaba Group’s
Tmall Global, their premiere marketplace that connects overseas
branded retailers to Chinese consumers. To be based in Hong Kong
and called Macy’s China Limited, the Macy’s-Fung joint venture will
curate a Macy’s online merchandise assortment especially for
Chinese customers and fulfill Tmall Global orders from Hong Kong
through local logistics channels, including LF Logistics, an
affiliate of Fung Retailing. Alipay will be a primary payment
channel for Macy’s e-commerce offerings in China.
“Millions of Chinese have come to know and love Macy’s when they
live in the United States or travel to New York, San Francisco,
Chicago and other American destinations. By making Macy’s
accessible in China, we have an opportunity to deepen our
relationship with domestic and international customers and to grow
sales. We have been closely following the development of the
Chinese marketplace for many years and have learned that success
requires that we have the right partners to help us navigate the
unique needs and characteristics of consumers in China,” said Terry
J. Lundgren, chairman and chief executive officer of Macy’s, Inc.
“Fung Retailing has deep experience and expertise in Chinese
retailing, and the Macy’s-Fung partnership will be instrumental to
helping set up and operate our test.”
Peter Sachse, Macy’s, Inc. chief innovation and business
development officer, said, “We have had initial success in
partnering over the past year with Alibaba on various projects,
including accepting Alipay on macys.com and conducting a
special promotion during Black Friday 2014. We believe that,
through the joint venture, Macy’s online presence on Tmall Global
will give us insight that will serve us well in evaluating future
international initiatives.”
The Chinese Internet population of some 668 million is the
driving force behind China’s e-commerce and online shopping boom,
along with the rise of a middle class forecasted to number 630
million by 2022. Fung Retailing complements Macy’s leadership in
U.S. omnichannel retailing with its own retail and wholesale
experience in Asia, where it has more than 3,000 stores across a
wide product range in various formats, including more than 1,000
stores in China. In addition to accumulating invaluable
on-the-ground experience of the product preferences and shopping
habits of Chinese consumers, Fung Retailing has focused intensely
in recent years on the application of technology to the Chinese
retail market, in particular to omnichannel retailing.
Fung Retailing’s Chairman Dr. Victor K. Fung said he was
delighted with the formation of the joint venture. “Macy’s is not
only a premier retailer in the States but also a frontrunner in
omnichannel retailing. I am confident that the joint venture will
be fruitful and mutually beneficial.”
Fung Retailing’s Executive Director Ms. Sabrina Fung added: “The
potential for growth is significant. While the Chinese online
consumer is already one of the savviest in the world, there are
untapped ‘white spaces’ to fill,” Ms. Fung said. “There is demand
for the quality and variety of power brands and authentic products
associated with the world-famous name of Macy’s. Many Chinese are
attracted to the American lifestyle, of which shopping at Macy’s is
the ultimate symbol.”
“Macy’s is one of the most iconic brands in the world, and we
are honored they have chosen us as their exclusive partner to grow
their business in China,” said Daniel Zhang, chief executive
officer of Alibaba Group. “Macy’s exclusive Tmall Global flagship
store is a major win for consumers across China. It
reinforces Tmall Global’s status as the premiere
solution for brands and retailers in their strategic online
presence and direct engagement with customers in China.”
Macy’s China Limited will be led by Kent Anderson, who will
serve as managing director. Anderson is a veteran Macy’s, Inc.
executive and long-time president of macys.com. Ms. Fung will
represent Fung Retailing’s interest on the board of the joint
venture company.
“As is always the case with Macy’s, we will test and learn as we
progress and grow our business in China. We will take one step at a
time,” Sachse said. “We intend to be a long-term player in this
region of the world, and that requires we understand the customer
so we can deliver an online shopping experience that Chinese
shoppers will appreciate, value and love.”
Macy’s began selling overseas into China and about 100 other
countries with an edited assortment on macys.com in 2011.
These goods are shipped to international customers from the United
States. In the upcoming e-commerce test, Macy’s China Limited will
ship to Chinese customers from inventories in Hong Kong, which is
expected to improve speed, flexibility and pricing for the
customer.
No physical Macy’s stores are planned for China at this time,
but may be considered in the future based on the company’s
experience in its e-commerce pilot.
Macy’s China Limited is expected to invest approximately $25
million in the operations of the joint venture over the next 18
months, of which Macy’s, Inc. will fund 65 percent. Macy’s, Inc.
expects no material impact on its earnings in fiscal 2015. Current
plans call for Macy’s e-commerce sales of approximately $50 million
in China in 2016. Future sales levels and investment, including
potential stores, will be determined after evaluating Chinese
shopping patterns and results in the initial e-commerce phase.
About Fung Retailing Limited
The retailing businesses of privately-held Fung Retailing
Limited extend from Greater China to Korea, Singapore, Malaysia,
Thailand, and the Philippines through a combined network of over
3,000 stores. They include stores operated separately and
independently by publicly-listed Convenience Retail Asia Limited
(SEHK: 00831) and Trinity Limited (SEHK: 00891), as well as the
privately-held Branded Lifestyle Holdings Limited, Fung Kids
(Holdings) Limited, Toys “R” Us (Asia) Limited, Suhyang Networks
Company Limited and UCCAL Fashion Group. Fung Retailing employs
over 18,000 staff, and its turnover exceeded US$1.8 billion in
2014. LF Logistics is a subsidiary of Li & Fung Limited (SEHK:
00494).
Note to Editors: Privately-held Fung Retailing Limited is
totally separate from the publicly-listed company Li & Fung
Limited.
About Macy’s, Inc.
Macy’s, Inc., with corporate offices in Cincinnati and New York,
is one of the nation’s premier retailers, with fiscal 2014 sales of
$28.105 billion. The company operates about 885 stores in 45
states, the District of Columbia, Guam and Puerto Rico under the
names of Macy’s, Bloomingdale’s, Bloomingdale’s Outlet and
Bluemercury, as well as the macys.com, bloomingdales.com and
bluemercury.com websites. Bloomingdale’s in Dubai is operated by Al
Tayer Group LLC under a license agreement.
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of
Macy’s management and are subject to significant risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by the forward-looking statements contained
in this release because of a variety of factors, including
conditions to, or changes in the timing of, proposed transactions,
prevailing interest rates and non-recurring charges, competitive
pressures from specialty stores, general merchandise stores,
off-price and discount stores, manufacturers’ outlets, the
Internet, mail-order catalogs and television shopping and general
consumer spending levels, including the impact of the availability
and level of consumer debt, the effect of weather and other factors
identified in documents filed by the company with the Securities
and Exchange Commission.
(NOTE: Additional information on Macy’s, Inc., including past
news releases, is available at www.macysinc.com/pressroom).
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version on businesswire.com: http://www.businesswire.com/news/home/20150812005604/en/
FUNG RETAILINGMedia – Geoff
Bilbrough, (852) 2586 7830geoff.bilbrough@fleishman.comorSadie Lam,
(852) 2586 7836sadie.lam@fleishman.comorMACY’SMedia - Jim Sluzewski, 513/579-7764Investor
– Matt Stautberg, 513/579-7780
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