Macy’s on Tuesday said it plans to close roughly 150 underperforming stores over the next three years, the struggling retailer’s latest effort to energize its business as it seeks to fend off a proposed takeover by activist investors.
The department store chain said it plans to focus on expanding its luxury brands, Bloomingdale’s and Bluemercury. Macy’s will shutter 50 stores over the next year. Overall, the restructuring plan will leave Macy’s with 350 outlets.
The announcement of the store closures comes after Macy’s last month rejected a $5.8 billion takeover offer from investing firm Arkhouse Management and its partner Brigade Capital Management.
Macy’s CEO Tony Spring, who stepped into the role this month after leading Bloomingdale’s for nine years, said the plan to close the underperforming stores will eventually help Macy’s to stabilize its sales, with a focus on customer service and updated product lines.
The problems facing Macy’s are “similar to what I first encountered at Bloomingdales — it’s going back to basics and balancing the art and science of retail,” Spring said in a Tuesday conference call with investors.
The stores that will be closed represent about a quarter of Macy’s square footage but account for about 10% of sales.
“Our threshold to keep a store open has become more stringent,” he said. “In the past we may have continued to operate a store that was cash flow positive. Now the bar has been raised.”
Like other brick-and-mortar retailers, Macy’s is battling an industrywide sales slump brought on by rising competition from online retailers. The company on Tuesday said its fourth-quarter net sales slipped 1.7% to $8.1 billion. Same-store sales at Macy’s declined 6% in the fourth quarter.
At the same time as it’s planning on closing some locations, Macy’s plans to shore up sales by expanding its small-format stores, which it thinks can provide more convenience to 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. The next round of expansion starts in the fall.
Before the planned store closures, Macy’s had been cutting jobs to bring down its costs. In January, Macy’s said it would trim 3.5% of its total workforce, or roughly 2,350 employees, and shut five stores. Those previously announced store closures are in Arlington, Virginia; San Leandro, California; Lihue, Hawaii; Simi Valley, California; and Tallahassee, Florida, according to CNBC.
—With reporting by the Associated Press.
