This post was updated to include additional commentary.
Macy's (M) is working hard to shed its winter weight as unseasonably warm weather in the fourth quarter caused disappointing sales in puffy coats and other cold-weather apparel, particularly puffer coats from Tommy Hilfiger, which is part of PVH Corp. (PVH).
The disappointing sales weren't a total surprise, as CEO Terry Lundgren said in an interview with TheStreet's Brian Sozzi in November that customers are "spending on things like home improvement items, tech downloads and eating out at restaurants." Shares of Macy's were down 47% in 2015.
On Wednesday, Macy's website showed discounts on coats ranging from 50% to 75%, with additional savings of 10% to 15% on select items when using a promo code. To get an idea of just how many coats Macy's was sitting on, Real Money visited the Macy's flagship location on Herald Square.
Two floors of the eight-story shopping behemoth were dedicated almost exclusively to winter coats, while other floors still had racks of coats from popular brands such as Tommy Hilfiger, Ralph Lauren (RL) and Calvin Klein, another PVH brand.
Nearly all the racks featured signage showing discounts ranging from 40% to 60%, which are less than the teaser discounts seen on the company's website.
Even so, Real Money was able to find several men's Calvin Klein puffer coats discounted by more than 70% and racks of Tommy Hilfiger puffers in a rainbow of colors discounted by 60%.
The eighth floor, which normally houses women's seasonal wear -- either coats or swimsuits -- was completely full of coats.
Swimwear was relegated to a corner on the fourth floor, where women's casual wear usually is. A salesperson told Real Money it is still a little early in the season for there to be a full stock of swimwear -- even for snowbirds -- but the current offering is a little smaller than usual and was pushed out of its usual spot by coats.
Even with the deeply discounted duds and New York City temperatures finally dipping below freezing, it wasn't clear that shoppers were actually buying. A number of shoppers in the women's coat section weaved through the aisles diligently checking price tags, but rarely took anything off the racks.
One shopper said she expected to see better discounts. Meanwhile, another shopper made a beeline to racks of coats made by North Face, a part of V.F. Corp. (VFC), but abruptly turned around after seeing the coats were not discounted. (To be sure, the Macy's website shows discounts of 25% on a few of North Face's baseline offerings, such as the Denali fleece jacket, but not on its more fashion-forward line.)
As a comparison, Real Money examined the winter coat offerings at discount retailers TJMaxx (TJX) and Century 21. Both stores have locations in New York City's Financial District.
TJMaxx had discounts on brands carried by Macy's, such as Ralph Lauren, that were on par with Macy's markdowns, but it is worth noting that TJMaxx's stock was considerably smaller.
Also, many of the deep markdowns were found on brightly colored coats, such as the Columbia Sportswear (COLM) coat below, which was discounted 60%. It was one of the few of its kind left at TJMaxx, and the bright color could be a deterrent for many mainstream shoppers. Meanwhile, Macy's full stock of coats -- even those in more popular muted colors like black and gray -- were heavily discounted.
Comparing Macy's coat stock to Century 21 painted a more interesting picture. The New York-based discount retailer is a favorite for cash-strapped fashionistas and tourists looking for deals on designer clothes. As expected, the store often is cramped and slightly chaotic. However, the coat section at Century 21 was surprisingly less cluttered than Macy's. Shoppers could walk between racks without brushing up against merchandise.
Also, while many coats were discounted 75%, it is worth mentioning that Century 21's slogan: "Up to 65% off retail, 100% of the time." Discounts are their business.
With Macy's discounts rivaling those found at true discount retailers, the company could be looking at another difficult year.