Multinational U.S. retailer Macy’s Inc.’s (NYSE: M) near-term growth does not seem so exciting. Macy’s quarterly sales fell 2.6% to $6.1 billion and comparable sales dropped 1.5% including other licensed departments. The company’s shares declined 5% to $64.11 on Wednesday. There are internal and external factors that caused such disappointment – heavy discount and promotions, decrease in international tourism due to a strong dollar, and the sluggish U.S. market.
However, Macy’s has a confident long-term growth story. The retailer had formed a joint venture with Hong Kong-based Fung Retailing Ltd., to sell on Alibaba Group Holdings Ltd. (NYSE: BABA).Over the next 18 months, the joint venture expects to invest $25 million, which Macy’s will own 65%. Alibaba hopes to see more growth through this deal, as it has been competing with JD.com (NASDAQ: JD). “Alibaba has gotten a lot more press in the United States than JD…They are much more known to the American investors as well as the consumers here,” said Macy’s Chief Executive Terry Lundgren. With Fung, Macy’s expects $50 million in e-commerce sales by 2016.