San Francisco, California – Macy’s, the well-known department store operator, has announced plans to close 150 underperforming stores over the next three years, with 50 of them shutting their doors by the end of this year. This decision comes after the retailer reported a fourth-quarter loss and a decline in sales. As part of its strategy, Macy’s is focusing on upgrading its remaining 350 stores by adding more salespeople to fitting areas and shoe departments and enhancing visual displays with features like mannequins. The company also revealed plans to pivot towards luxury, citing better overall performance in that sector.
These closures represent approximately 25% of Macy’s overall square footage but less than 10% of its total sales. While specific locations have not been disclosed, San Francisco’s Mayor London Breed confirmed that Macy’s iconic Union Square store in the city will be one of the affected properties. The closures mark the second significant round of store cuts for Macy’s, following a decision in February 2020 to close 125 underperforming stores and cut 2,000 corporate jobs.
Despite reporting fourth-quarter adjusted net income and revenue that exceeded Wall Street expectations, Macy’s CEO Tony Spring cautioned about the company’s outlook for the year ahead. The department store chain is facing pressure from activist investors, including Arkhouse Management, which recently nominated a slate of nine directors to join Macy’s board. Additionally, Macy’s rejected a $5.8 billion takeover offer from hedge fund Brigade Capital Management.
Amid intensifying competition from online retailers, Macy’s is looking to increase sales by accelerating the expansion of small-format stores, aiming to provide more convenience to customers. The company is also focusing on overhauling its private brands and enhancing the shopping experience based on feedback collected from 60,000 customers. While looking to cut costs by reducing its workforce and closing certain locations, Macy’s remains committed to its physical stores, with plans to upgrade the customer experience in its flagship namesake stores first.
Despite a quarterly loss and a decline in sales, Macy’s is optimistic about its future strategy, aiming to refocus on its core strengths and cater to changing consumer preferences. The company’s efforts to adapt to evolving market conditions and enhance its offerings reflect its commitment to remaining a relevant and competitive player in the retail industry.