New York City — Macy’s Inc. (NYSE: M) has announced plans to close 150 of its namesake department stores over the next three years. According to the retail giant, these stores represent 25 percent of the company’s gross square footage as of fiscal year-end 2023 but only account for 10 percent of sales. (Macy’s fiscal 2023 ended Feb. 3, 2024.)
Macy’s anticipates closing approximately 50 stores by the end of fiscal year 2024, the locations of which have not been disclosed, though CNBC reports some are located in California, Florida, Hawaii and Virginia. Other elements of the retailer’s real estate optimization strategy, which it is naming “A Bold New Chapter” in its investor materials, includes reinvesting in its remaining 350 stores.
“Over the past several years, we have taken proactive actions to fortify our operations, including strengthening our balance sheet, managing expenses and tightening inventory controls,” says Adrian Mitchell, chief operating officer and chief financial officer of Macy’s. “The dedicated work of our teams delivered a solid close to 2023 and provides a strong foundation for us to execute A Bold New Chapter.”
As part of the plan, Macy’s will open at least 30 Bluemercury stores, the company’s smaller footprint luxury beauty retailer, as well as roughly 15 Bloomingdale’s, a luxury retail brand that also operates in smaller stores than typical Macy’s locations. These Bloomingdale’s stores include new Bloomie’s and The Outlet locations. Additionally, Macy’s plans to remodel 30 existing Bluemercury stores.
The plan to open new Bloomingdale’s and Bluemercury stores is expected to grow Macy’s luxury footprint by approximately 20 percent.
The company outlined its vision in its fiscal 2023 results, which saw net sales decline 1.7 percent in the fiscal fourth quarter compared with fourth-quarter 2022. This is highlighted by overall digital sales declining 4 percent year-over-year.
Notably, brick-and-mortar sales were down for Macy’s namesake stores (-2.5 percent) in fiscal fourth-quarter 2023 compared to Bluemercury and Bloomingdale’s, which saw sales improve by 7.8 percent and 3.5 percent, respectively.
According to Macy’s, the real estate strategy has the full support of the company’s board of directors. The plan was created by the company’s leadership team, including new CEO Tony Spring, former CEO of Bloomingdale’s. Spring took over the CEO role earlier this month, according to CNBC.
Also part of the strategy, Macy’s is expanding its incubator store program to 50 locations, referred to as “The First 50.” The company disclosed that the incubator stores, which feature more associates on the floor and stronger visual presentations of merchandise, outperformed traditional Macy’s stores in sales performance. The retailer plans to implement findings from The First 50 to its portfolio of stores beginning in fiscal year 2025.
The stock price for Macy’s closed at $19.30 per share on Monday, Feb. 26, down slightly from $20.41 a year ago.
— John Nelson