Macy’s Inc., which operates nine department stores in Arizona and employs 3,700 people in the state, announced it will close about 100 full-line stores across the country, most by early next year.
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Macy’s announced the future closings on Thursday and said it will identify the approximately 100 of its 728 locations that will close once that list is finalized. “We recognize that these locations do not yield an adequate return on investment and often do not represent a customer shopping experience that reflects our aspirations”. The company said it has not yet decided which locations will be closed.
Macy’s said its same-store sales last quarter – that is, sales at stores open at least one year, which is a key gauge of retailing – fell 2% from the same quarter last year. But with a steep drop in profit and sales still on the decline, the department giant said it will close 100 stores. In the first quarter of this year, when sales plummeted even faster at Macy’s and almost all of its department store peers, sales growth for TJX’s domestic business segments accelerated to 9.3%. While Macy’s would have to shrink some other departments, the result should be a flagship store that is more profitable than ever – plus a massive windfall from selling the excess real estate.
Macy’s said the upcoming store closings would not affect its Bloomingdale’s division.
In some ways, it should not come as a surprise that Macy’s is slashing stores. Even before Thursday’s announcement, Lundgren had been slashing costs, closing stores and adding off-price options to appeal to customers.
Sales in the second quarter were $5.9 billion, down 2.6 percent from a year ago, according to company data. For the same period past year, net income was $217 million on $6.1 billion in net sales. That guidance calls for adjusted earnings per diluted share in the range of $3.15 to $3.40, comparable sales on an owned-plus-licensed basis to decrease in the range of 3% to 4%, and owned comparable sales falling around 50 basis points year over year. Investors are likely positive on the store closure news and the money it will save, as well as the prospect for real estate sales that could lead to more share repurchases or a dividend hike.
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These factors, along with short-term hitches such as decreased spending by global tourists and unseasonable weather, have left Macy’s in a rough patch that has stretched for more than a year. And the changes affect everything from the experience on the store floor to who’s sitting in the most executive office.
