Macy’s Inc. is partnering with a second Indianapolis-based purveyor of sports apparel by opening standalone departments within its stores that sell team merchandise from retailer Lids.
To be branded Locker Room by Lids, the departments will open in about 25 Macy’s stores in the fall, with an additional 175 departments rolling out in the spring, the retailers announced last week. Lids apparel also will be available for order via the Macy’s website, and on Internet kiosks in the departments.
The departments will be operated by Indianapolis-based Lids Sports Group, a national seller of licensed team products and a subsidiary of Nashville, Tenn.-based Genesco Inc. The departments will range from 500 to 1,000 square feet.
The deal closely follows Macy’s arrangement in April to make Indianapolis-based The Finish Line Inc. its exclusive provider of athletic footwear. Finish Line expects to have branded alcoves in 188 Macy’s stores this year and in 472 within the next 18 months.
The Locker Room by Lids departments will be located in retail markets with major collegiate athletic programs and professional sports teams.
“The opportunity to partner with Macy’s allows us to immediately capture underserved markets in virtually every major sports city in the U.S.,” Ken Kocher, president of LIDS Sports Group, said in a prepared release. “Combining our expertise in sports licensed merchandising with Macy’s retail dominance gives us the ability to serve a much larger cross-section of sports fans both in-store and online.”
Mark Montagna, senior research analyst for Nashville, Tenn.-based Avondale Partners, told clients that the arrangement is a low-risk proposition for Lids and Genesco, according to the Nashville Post.
Montagna considered it an inexpensive way to add to Genesco’s reach in many of the nation’s largest cities, and that the stores should begin to post margins at or a little above its regular Locker Room stores by mid-2014.
Macy’s, with corporate offices in Cincinnati and New York, recorded sales of $27.7 billion in 2012. The company operates about 840 department stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names Macy’s and Bloomingdale’s.
On Wednesday, Macy’s posted fiscal second-quarter profit that trailed analysts’ estimates and cut its forecast for earnings this year after sales unexpectedly dropped.
Profit in the period ended Aug. 3 rose 0.7 percent to $281 million, or 72 cents a share, from $279 million, or 67 cents, a year earlier, Macy’s said in a statement. Analysts had projected 78 cents, the average of 19 estimates compiled by Bloomberg News.
“It’s still pretty tough out there for middle-income consumers,” Brian Yarbrough, an analyst with Edward Jones & Co. in St. Louis, told Bloomberg News on Wednesday. “If you look at the kinds of jobs people are getting, they are service jobs paying $9 to $12 an hour. They are spending on homes and cars, they are not spending on apparel.”
Shares of Macy’s declined about 4.5 percent, to $46.21, in early trading Wednesday morning.