Another 100 struggling Macy’s stores are disappearing.
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Macy’s Inc. said Thursday it plans to close 100 full-line stores in an effort to accelerate cost-cutting at a time when the department store chain’s overall sales are falling.
While Macy’s officials said the retailer still sees brick and mortar stores as a key part of its strategy, the closures will allow the company to invest more and more quickly in digital and mobile shopping initiatives.
The moves helped the company post second-quarter profit of $1.22 a share, excluding some items, topping analysts’ $1.03 average estimate.
Yet the company’s stock soared 17 percent on Thursday, a sign that investors view the move as a proactive measure that portends a stronger future for Macy’s.
Macy’s is going to start focusing more on online sales and adding new vendors to physical stores.
Under Lundgren, Macy’s hasn’t been sitting still and has been looking for opportunities to boost sales, from buying upscale beauty brand Bluemercury to launching its own off-price stores called Macy’s Backstage. The retailer will not pull out entirely of any of the top markets where it now operates stores, but will look to close stores that are in weak locations. “In the short term, our company’s topline sales will be somewhat smaller”, Macy’s President Jeff Gennette said in a news release. And the changes affect everything from the experience on the store floor to who’s sitting in the most executive office. But the size of this newest consolidation and the fact Macy’s says that almost all of the to-be-closed stores are now profitable, suggests MI might not emerge unscathed this time.
There’s no definitive information yet on which stores will close, so it’s unknown if the stores in Santa Rosa at Santa Rosa Plaza or Coddington Mall will remain open.
The number of stores Macy’s is planning to shut represents annual net sales volume of about $1 billion. Macy’s told CNNMoney it won’t detail layoffs until it finalizes its store closure list.
Karen Hoguet, Macy’s chief financial officer, said most of the stores being closed are “underperformers, or are in weak locations”. It also looked at demographics such as changes in population and income, and noted that in some good markets it has stores in underperforming malls.
Retail chains including Walmart, Kohl’s, Sears and Kmart have also announced sweeping store closures in recent months. Officials had expected Macy’s to earn between $3.80 to $3.90 per share. It’s in talks to sell its men’s store in San Francisco, which would likely result in the store closing.
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The company also said it would continue to invest in its online business.
