The stores slated to be closed represent around four per cent of its declining revenue.
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Macy’s now operates 675 full-line stores nationwide and 728 stores overall.
The idea behind closing more stores is that Macy’s will be able to reinvest the money to take a more aggressive approach online.
Macy’s had been a strong performer since the recession, but the company has seen sales slow as it grapples with competition and changing shopping patterns. And when they do buy clothing, they are going to lower-cost options such as T.J. Maxx and fast-fashion chains like H&M.
The announcement comes on the heels of Wednesday’s news from Coach that it will stop selling handbags and leather goods at about 250 department stores across North America because the stores’ steep discounts are hurting the luxury perception of the brand among shoppers. 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. That’s down about 23 percent from the January 2007 peak of 868 total.
Most of the affected stores will close in early 2017, the company said in a statement, while some will close based on when leases expire.
Neil Saunders, CEO of research firm Conlumino, said the Macy’s store closures are “sensible”, but largely the result of a “self-inflicted defeat”.
Macy’s has been under pressure from investors to sell some of its valuable real estate. The plans are for the men’s store to be recombined into its main Union Square store.
Shareholders’ net income fell to $11 million, or 3 cents per share, in the second quarter from $217 million, or 64 cents per share, a year earlier.
Despite the department store’s sluggish sales and profits recently, its second quarter results beat Wall Street expectations, lifting its stock by 14 percent in early trading.
Excluding the charges, Macy’s earned 54 cents per share.
Analysts predicted 45 cents in adjusted earnings per share and $5.75 billion in revenue, according to Thomson Reuters.
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During the previous quarter, sales in Macy’s outlets operating for at least one year dropped two percent, which is still an improvement compared to the sharp fall during the 1 quarter. Kohl’s Corp (KSS.N), which also reported better-than-expected profit and sales, was up 13 percent at midday, while Nordstrom Inc (JWN.N) was up 6 percent and J.C. Penney Co Inc (JCP.N) 6.4 percent. Still, it marked the sixth straight quarterly decline.
