The “world’s largest store” is slimming down.
Macy’s plans to close around 150 “unproductive” stores within the next three years, including 50 projected to shutter by the end of the current fiscal year, the retailer said in a statement announcing a “bold new chapter.”
The 150 stores set to close account for nearly a third of Macy’s current total of approximately 500 locations. At its peak, the company boasted over 1,000 stores.
In a change from past practice, Macy’s will even shut stores with positive cash flow if they are considered “underperforming,” Tony Spring said in the first Macy’s earnings call since he took over as CEO.
“Our thresholds to keep [stores] open have become more stringent,” Spring said.
He noted the closing stores represent about 25% of Macy’s gross square footage but less than 10% of its sales.
The reduction will leave Macy’s with around 350 standard department stores. It also has more than a dozen small-format stores, and clearly sees a future in them. The company said it plans to add 30 more small-format locations over the next two years.
Spring said Macy’s also sees opportunity on the luxury end of its business, calling Bloomingdale’s and skin care brand Bluemercury “outperformers within our portfolio.” Fifteen new Bloomingdale’s stores and at least 30 Bluemercury openings are planned within the next three years.
During the earnings call, Macy’s reported disappointing results for the 2023 fiscal year (ended Jan. 28), with comps falling 6.9%, and net sales dropping 5.5% to $23.1 billion.
“The consumer remains under pressure,” said chief operating officer and chief financial officer Adrian Mitchell. “As a result, what we’re seeing across the industry are higher credit card balances and higher delinquencies really returning to more normalized levels. …the last few years had an abnormally low or historically low level of net credit losses, delinquencies, as folks were flushed with cash. But now we’re back to more normal times.”
(Photo courtesy of Macy’s)
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