Macy's CEO Optimistic about Spending, Enters Joint Venture with Alibaba

By FOXBusiness

Macy’s CEO on the state of the U.S. consumer

Macy’s CEO Terry Lundgren on the retailer’s second-quarter earnings and outlook.

Macy's (NYSE:M) reported lower than expected quarterly sales crediting the decline to reduced spending by foreign tourists.

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However, the retail giant's CEO Terry Lundgren is optimistic for the second half of the year as he believes that consumers will pick up their spending, especially around the holidays.

Currently, consumers are saving more and spending less on apparel. "Right now, consumers are buying cars, homes and are paying more for healthcare" Lundgren told Maria Bartiromo on FOX Business Network's Mornings with Maria.

The apparel retailer is facing fierce competition from Amazon Fashion (NASDAQ:AMZN), which was recently pegged to become the largest apparel retailer by 2017 according to an industry report.

Lundgren noted that one of Macy's strongest divisions is sportswear including athletic apparel and footwear.

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When asked about how brands like Michael Kors (NYSE:KORS), which did report better than expected earnings despite complaints of an oversaturated market, are faring at Macy's, Lundgren said to not count them out.

And ahead of releasing its earnings, Macy's also announced that it would enter into a joint partnership with Chinese e-commerce giant Alibaba (NYSE:BABA) to sell in China through Fung Retailing Limited. This marks the first retail partnership that Alibaba will engage in with an American company.

In late 2015, Alibaba will launch an exclusive online flagship store for Macy's where Chinese consumers can purchase apparel, accessories and home items. Lundgren said that Macy's will own all of the inventory in Hong Kong instead of shipping items from the U.S.

When asked if he is worried about the Chinese government's influence in the markets, Lundgren said that he has an advantage because he's starting fresh and is new in the Chinese market.

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