Macy’s 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.
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Macy’s announced Thursday it will close 100 stores nationwide, although the company didn’t say if the Beaver Valley Mall location would be on the list.
United States department store giant Macy’s is to close 100 more of its bricks and mortar stores and increase its focus on its online operations. Image source: The Motley Fool.
Macy’s isn’t the only retail chain that is downsizing – or shutting down altogether. It will also be good for many of Macy’s rivals, most notably The TJX Companies (NYSE: TJX). Workers displaced by store closings will be offered positions at nearby stores where possible, Macy’s said, and eligible full-time and part-time employees who are laid off will be offered severance benefits. A number of the stores are being closed because the redevelopment value of their real estate is higher than their value as stores, the company said.
To combat online sale events like Amazon’s Prime Day, Macy’s joined other department stores in running a Christmas in July promotion to entice shoppers. “And our retailers have found a way to continue to make themselves relevant to their consumers and meet their consumers’ needs”. The department store was the mall’s largest tenant. This could free up hundreds of millions of dollars for debt reduction or share buybacks. Furthermore, the company owns numerous stores it will be closing, and it expects to generate substantial proceeds from selling these stores to mall owners, developers, or other interested parties.
“The announcements we are making today represent an advancement in our thinking on the role of stores, the quality of the shopping experience we will deliver, and how and where we reinvest in our business for growth”, said Jeff Gennette, Macy’s, Inc. president and CEO designee for 2017.
The company’s discount stores saw sales increases, with Nordstrom Rack comparable sales up 1.1 percent and Nordstromrack.com/HauteLook up 34.7 percent. The plans are for the men’s store to be recombined into its main Union Square store. Macy’s said the upcoming store closings would not affect its Bloomingdale’s division.
The news overshadowed a strong earnings report for Macy’s, which exceeded Wall Street expectations with a $9 million profit on revenue of $5.9 billion.
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In the past couple of years, TJX has shown itself to be adept at capitalizing on department stores’ woes. The stores had opened in 1980 and employed more than 50 workers each.
