Macy’s to close 150 namesake stores as sales slip, pivot to luxury with new Bloomingdale’s locations
NEW YORK — Macy’s will close 150 unproductive namesake stores over the next three years including 50 by year-end, the department store operator said Tuesday after posting a fourth-quarter loss and declining sales.
As part of the strategy, Macy’s aims to upgrade its remaining 350 stores, with plans to add more salespeople to fitting areas and shoe departments, while adding more visual displays like mannequins. At the same time, the company signaled a pivot to luxury, which has fared better overall. It said it would open 15 of its higher end Bloomingdale’s stores and 30 of its luxury Bluemercury cosmetics locations.
The Macy’s stores set to close account for 25% of overall square footage but less than 10% of its sales, the company said.
Macy’s did not provide a list of planned closures, but San Francisco’s Mayor, London Breed, confirmed that the retailer’s sprawling store in the city’s Union Square downtown shopping district would be shuttered. While not among the first 50 to be closed, Breed said she was told by Macy’s that it is seeking a buyer for the San Francisco property.
“It’s hard to think of Macy’s not being part of our city anymore,” she said.
Macy’s store closures marked the second biggest store cuts since February 2020 when it announced it was closing 125 of its least-productive stores and cutting 2,000 corporate jobs.
While reporting fourth-quarter adjusted net income and revenue that topped Wall Street expectations, Macy’s offered a muted outlook for the year.
“We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value,” said Macy’s CEO Tony Spring, former CEO of Bloomingdale’s who succeeded Jeff Gennette earlier this month.
Shares of New York-based Macy’s Inc. rose 3.4%, or 65 cents, to close at $19.95 Tuesday.
The plans come as the department store chain faces a proxy fight from Arkhouse Management, which nominated a slate of nine director for election to Macy’s board last week. Last month, Macy’s rejected a $5.8 billion takeover offer from the hedge fund and Brigade Capital Management, an investment manager.
Activist investors and pressure to increase sales are just two critical issues facing the new CEO.
Even before the pandemic, department stores were facing intense competition from online rivals. Neiman Marcus and JCPenney filed for bankruptcy protection, emerging as smaller entities.
Consumers have proven resilient and willing to shop even after a bout of inflation, though behaviors have shifted, with some Americans trading down to lower priced goods.
Macy’s is maneuvering to shore up sales by accelerating the expansion of small-format stores that can provide more convenience to its customers. It announced plans in October to add up to 30 small-format locations through the fall of 2025, bringing the total number to roughly 42.
