Macy’s in big store closing move

Macy’s Inc. announced that it will close 100 full-line namesake stores as part of a wider effort to improve its business and succeed in an omnichannel environment. The move comes after six straight quarters of declining same-store sales.



The department store giant said it plans to concentrate its resources on the best-performing locations, and to invest in those stores by adding new vendor shops, increasing the size and quality of staff and new technology.



The majority of the 100 stores will close in early 2017, with the balance closing as leases expire or are amended or waived. The total annual sales volume of the stores to be closed is expected to be roughly $1 billion. The reduction in EBITDA is expected to be offset by expense savings beyond those associated with store closings.



The department store giant, which currently operates 728 Macy’s stores, will announce the locations of the stores to be shuttered at a later date. Over the past six years (2010 through 2016 to date), approximately 90 Macy’s stores have been closed and 13 new Macy’s stores have been opened. In addition, six new Macy’s Backstage off-price locations opened in fall 2015.



“The announcements we are making today represent an advancement in our thinking on the role of stores, the quality of the shopping experience we will deliver, and how and where we reinvest in our business for growth,” said Jeff Gennette, president, Macy’s, who will succeed Terry Lundgren as Macy’s CEO in the first quarter of 2017. “In the short term, our company’s topline sales will be somewhat smaller, but the changes being made will position us to grow comparable sales more quickly and generate a level of profitability that stands out among retailers.”



Macy’s emphasized that it will still maintain a significant bricks-and-mortar presence in 49 of the top 50 U.S. markets, and that stores will remain critical customer touchpoints in its strategy, along with online shopping and mobile apps, as omnichannel retailing continues to evolve.



According to Gennette, nearly all of the stores to be closed are cash flow positive today, but their volume and profitability in most cases have been declining steadily in recent years. And in a number of instances, stores will be closed as the value of the real estate exceeds their value to Macy’s as a retail store.



“We recognize that these locations do not yield an adequate return on investment and often do not represent a customer shopping experience that reflects our aspirations for the Macy’s brand,” Gennette said. “We decided to close a larger number of stores proactively so we can invest in a winning customer experience in our most productive and highest-potential locations, as well as invest in growth sooner and more aggressively in digital and mobile.”



Going forward, Macy’s said it will operate fewer stores and concentrate its resources on its better-performing locations to elevate their status as preferred shopping destinations.



Macy’s operates about 880 stores in 45 states, the District of Columbia, Guam and Puerto Rico under the names of Macy’s, Bloomingdale’s, Bloomingdale’s Outlet, Macy’s Backstage and Bluemercury, as well as the macys.com, bloomingdales.com and bluemercury.com websites.