Macys, the countrys largest department store chain, plans to close more than 10 percent of its locations as part of efforts to reverse years of sagging sales and increase profits.
Advertisement
Macy’s announced plans Thursday for “re-creating Macy’s physical store presence”. Officials did not say which locations would be affected.
The closure of 100 stores is “a dramatic step that will allocate more funds to (the firm’s) digital businesses in order to meet the demands of modern consumers, who are increasingly doing their shopping online”, according to the announcement. He said that after the finalization of the deal, Men’s store would be incorporated within the main Macy’s store on Union Square.
Stifel analyst projects annual loss of $1 billion sales, but expectes EBITDA reduction to be offset by “expense savings beyond the costs associated with store closings”.
Macy’s will shut most of the targeted locations early next year, although some might stop operating this year as leases expire, the company said in a statement.
The company said it recognizes that those locations aren’t yielding an adequate return on investment, and that they often “do not represent a customer shopping experience that reflects our aspirations for the Macy’s brand”.
While the company had rebounded well since the Great Recession, it has seen slowing sales over the past year and a half, The Associated Press reported.
People are spending more of their money on home improvement, travel or spas.
Department stores have been struggling with stiff competition from online and off-price retailers.
In addition to underperforming stores, Macy’s also expects to close a handful of stores that sit on valuable real estate.
“As far as the department-store sector goes, it’s a shrinking sector”, said Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm headquartered in NY.
Since 2010, approximately 90 Macy’s stores have been closed while three new stores have opened.
“Customers almost everywhere in America will have easy access to Macy’s stores, with the additional convenience and increased functionality of our dynamic digital offering”, Macy’s President Jeff Gennette said in the press release. That’s down about 23 percent from a peak in January 2007 of 868 stores including Bloomingdale’s.
What: Shares of Macy’s Inc. Terry Lundgren, the retailer’s chief executive, has said before that the chain simply had too many stores. That’s almost 4 percent of Macy’s total annual sales in 2015.
“What you have is a cascading effect”, Millman said.
National retailer Macy’s plans to close 100 stores around the country, but whether the Macy’s department store in the Valley River Center in Eugene is on the chopping block remains unclear.
Advertisement
Continuing on a day of retail cheer, Nordstrom reported second quarter earnings that handily beat Wall Street expectations and sent its stock shooting up 11 percent in after-hours trading.
