Macy’s said Thursday that it plans to close about 100 stores next year and boost online investments as the nation’s largest department store chain tries to become more nimble in an increasingly fierce retail market.
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The Cincinnati-based company said the locations of the closed stores would be announced at a later date.
Macy’s is under pressure from activist investor Starboard Value LP to unlock value in its properties and on Thursday said it would keep trying to monetize real estate at its flagship and mall-based locations, including the iconic Herald Square store in NY.
Thursday’s announcement was paired with an earnings report in which the company reported second-quarter sales of $5.866 billion – a 3.9 percent drop compared to the same period previous year.
“According to The Associated Press, “(t) he results surpassed Wall Street expectations. Women’s Wear Daily reported that the company’s net income fell to $9 million from $217 million – largely due to costs surrounding the pending store closings and retirement plan settlement charges.
So what: Quarterly revenue declined 3.9% year over year, to $5.866 billion, including a 2% decline in comparable sales on an owned-plus-licensed basis. That topped the $5.77 billion estimate from FactSet. In all likelihood, this will allow it to continue siphoning sales away from Macy’s and other department stores.
The stock was up 16.9 percent, to $39.75, in early afternoon trading.
WCPO Insiders will learn why those Macy’s stores are the most vulnerable to closure.
“A number of factors worked in our favor in the second quarter, including a normalized weather pattern, which contributed to a sales lift in our apparel business in particular”. Still, it marked the sixth straight quarterly decline. Macy’s now operates 728 stores, nine of which are in North Carolina, according to its website.
Macy’s will retain some of the sales from the stores it closes in nearby stores and online.
The company said it was sticking to its outlook.
With the Empire State building in the background, the Macy’s logo was illuminated on the front of the department store in NY in November 2013.
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Jeff Gennette, Macy’s president and the designated successor to Mr. Lundgren, said the store closures will shrink sales in the near term.
