New York (AFP) - Macy's unveiled Thursday a plan to showcase Toys 'R' Us merchandise in its shops as the famed American department store offered a sunny 2021 forecast that sent shares soaring.
Starting next year, consumers will be able to shop for toys at more than 400 Macy's nationwide through a store-within-a-store format, Macy's said in a joint press release with WHP Global, which controls the Toys "R" Us brand.
The toy brand known for its colorful Geoffrey the Giraffe mascot had fallen on hard times and struggled to survive as a stand-alone brick-and-mortar chain.
Macy's touted the partnership as a source of potential growth.
Store closures amid the coronavirus pandemic added to already difficult environment due to the rise of Amazon and other online retailers.
As they have shuttered low-performing shops in a retail segment that has shrunk in recent years, department stores have tried to compete by unveiling more mini-stores for cosmetics and other goods.
Macy's views toys as a good "entry category" for millennial consumers who grew up with the toy brand and are now parents.
"We think we can quintuple the size of the (toy) business," Macy's Chief Executive Jeffrey Gennette said.
"And obviously those footsteps, eyeballs (could) translate into other categories," he said in a conference call with analysts.
And Toys "R" Us will get good billing at Macy's annual Thanksgiving Day parade in New York.
The venture will also give a boost to the troubled toy brand, which was acquired by WHP earlier this year following the chain's 2018 bankruptcy that shuttered more than 700 stores across the United States.
Macy's announcement came in parallel to its release of second-quarter profits of $345 million, a sharp turnaround after posting a loss of $431 million in the same period of last year. The rebound came amid a 59 percent jump in sales to $5.6 billion.
Macy's also lifted its 2021 sales and profit forecast, pointing to a boost from customers returning to retail stores as well as its ability to draw about five million new customers to the chain as shoppers emerge from the pandemic.
Macy's executives also said they face less pressure from off-price retailers, who face increased costs due to higher wages and shipping expenses.
Shares of Macy's surged 22.3 percent to $22.08 in afternoon trading.
