Macy’s announcement that it will be shuttering 100 of its department stores failed to mention one crucial piece of information – which locations will be axed.
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Macy’s announced plans Thursday for “re-creating Macy’s physical store presence”. It is now involved in talks for potential partnerships that will monetize the company’s large real estate assets including stores in Herald Square and Union Square (New York). It reported another quarter of falling profits and sales, though it said some moves like sprucing up its fine jewelry area and adding back some sales staff are helping.
Macy’s shares have dropped roughly 3 percent since the beginning of the year, while the Standard & Poor’s 500 index has risen slightly more than 6 percent.
However, that had changed in the last decade, with the rapid growth of the online giant Amazon, discount and low-priced stores like TJ Maxx gaining popularity, as also an extended recession that reset the value of a dollar.
Macy’s decision to close stores is part of a strategy aimed at “recreating the Macy’s store portfolio” to operate in only the most attractive retail locations in the United States according to a press release on the company website.
Company shares, which are down 50 percent during the last 12 months, rose 15 percent to 38.95 percent in pre-market trading. The company said it has not yet decided which locations will be closed.
The number of stores Macy’s is planning to shut represents annual net sales volume of about $1 billion.
Macy’s reported Thursday that profits and sales fell in the second-quarter. Excluding one-time items, per-share earnings were 51 cents, topping the 48 cent estimate of analysts.
The closures are likely to lead to the loss of thousands of jobs and create large vacancies at malls, which lead to less foot traffic and fewer sales for the remaining smaller stores. The company has 127 locations in California.
While Macy’s earnings beat Wall Street expectations, it still has a long way to go to see business perk up. The stock had slipped 2.8 percent this year through Wednesday.
Macy’s was founded in 1858 when it opened four small department stores in MA.
Revenue fell 3.9 percent to $5.87 billion.
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Macy’s sales fell almost 4.0 percent during the second quarter, it said on Thursday, but that was better than analysts had expected and helped to send its shares and those of other department stores higher.
