Macy’s to Close 125 Stores
By Todd Horwitz
Stuck in a sales slump, Macy’s is shrinking to grow. The department store chain announced Tuesday it plans to shut 125 stores over the next three years and slash about 2,000 corporate jobs, as it closes its Cincinnati headquarters and tech offices in San Francisco.
Macy’s said it plans to exit weaker shopping malls, and instead shift its focus toward opening smaller-format stores in strip centers. Macy’s has shuttered more than 100 stores since 2015. Still, looking ahead three years from now, even with these changes, growth at Macy’s looks abysmal.
With a smaller base of stores, Macy’s said net sales in fiscal 2022 are expected to be within a range of $23.2 billion to $23.9 billion, while earnings per share, on an adjusted basis, will be between $2.50 and $3.00. Same-store sales, on an owned plus licensed basis, are forecast to be down 1% to flat.
“We are taking the organization through significant structural change to lower costs, bring teams closer together and reduce duplicative work,” CEO Jeff Gennette said in a statement. “The changes we are making are deep and impact every area of the business, but they are necessary. I know we will come out of this transition stronger, more agile and better fit to compete in today’s retail environment.”
Macy’s shares were recently down less than 1% in extended trading, after initially jumping more than 3% on the news. Over the past five years, Macy’s stock has lost well over half its value, and its market value has tumbled to $5.1 billion.
The appeal of the new stores will be their location in shopping centers, which offer easy access off main roads, and their smaller size of about 15,000 square feet, which is one-tenth the size of a typical Macy’s, Mr. Gennette said. Mr. Gennette said he plans to have four or five of the new stores open by year-end, including in Dallas, Fort Worth, Texas, and Washington, D.C. The company will also open seven free-standing Backstage stores this year. “Our brick and mortar strategy won’t be constrained by our mall presence,” Mr. Gennette said. “We have options to expand off the mall.”
Todd “Bubba” Horwitz