The ones that will be shut down are full-line stores, and they generate roughly $1 billion in annual sales, or 4 percent of Macy’s total sales. It has shuttered roughly 90 Macy’s stores over the past six years, and opened 13 new locations.
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Kohl’s, which also reported better-than-expected sales and profit, closed up 16 percent at $44.19.
Despite the results, CEO Terry Lundgren said Macy’s was “encouraged by the distinct improvement in our sales and earnings trend in the second quarter”.
That prompted a 17 percent jump in Macy’s shares, a 16 percent boost in Kohl’s, and even a almost 8 percent jump in Nordstrom’s shares.
“Consumers have started moving to dollar stores and places like off-price chains” at the expense of Macy’s and other department stores, said Burt Flickinger, managing director at retail consultancy Strategic Resources Group in NY.
Department stores trying to recapture their appeal plan to provide more experiences such as spas and restaurants, and offer exclusive selections. Amazon.com is by some forecasts expected to surpass Macy’s as the largest online seller of clothing next year.
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.
This announcement came after the retailer committed to closing 40 of its stores back in January. The current round of closures will leave Macy’s with about 575 full-line stores.
The Macy’s at the Ohio Valley Mall operated as Kaufmann’s from 1979 until a 2005 corporate merger led the company to change the store’s name.
“In a number of cases, stores will be closed as the value of the real estate exceeds their value to Macy’s as a retail store”, Macy’s said in a press release.
– Officials with Macy’s are in negotiations to sell their flagship men’s store in San Francisco’s Union Square, company officials said today. Turnover dropped 3.9 % to 5.9 billion dollars (5.3 billion euro), while its net profit fell sharply, from 217 million dollars (194 million euro) to 11 million dollars (10 million euro). That compares with a loss of $117 million, or 38 cents per share a year ago. Excluding charges that are related to store closings, the company earned 51 cents, which is above the 48 cent estimate from FactSet.
These results might not sound particularly encouraging, but for perspective, analysts’ consensus estimates predicted lower revenue of $5.74 billion, and adjusted earnings of just $0.45 per share. It attributed this mainly to the closure of 41 stores in the last fiscal year. That’s almost 4 percent of Macy’s total annual sales in 2015. In the first quarter, the company reported a 0.4 percent dip in in that measure, reversing five straight quarters of growth.
The number of transactions was down 5 percent compared to past year but that was an improvement from the prior quarter. The company favors stores that benefit from tourism and are in or near a metropolitan area, she said.
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The Cincinnati company, which now has 728 Macy’s stores, yesterday reported second-quarter sales of $5.866 billion, a 4 percent drop from the prior-year period.
