Responding positively to the store-closure announcement, Macy’s stock soared 17.1 percent to $39.81, although still down 40 percent from its one-year high, according to USA Today.
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People are spending more of their money on home improvement, travel or spas. Macy’s, which flourished during the Great Recession, is now believed to be suffering from increased competition from fast-fashion retailers like H&M, discounters like T.J. Of course, Macy’s online shop will remain in full force.
Under Lundgren, 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.
Macy’s announced plans on Thursday to close about 15% of its department stores, the latest effort to adapt to shifting consumer preferences for shopping online at Amazon and elsewhere.
The closings represent a large shift in the company’s portfolio, which now includes 728 Macy’s stores around the country.
The department store chain has seen six straight quarters of declining sales, reporting a loss of 4 percent in the second quarter.
Macy’s closures represent $1 billion in sales that will be up for grabs by its competitors.
Gennette said they are closing a large number of stores “proactively” to better invest in the most profitable and “highest-potential locations”.
The company has been under pressure from activist investor Starboard Value to monetise its huge real estate portfolio.
“Market demographics change over time and this country is over-stored”, Macy’s Chief Financial Officer Karen Hoguet told Wall Street analysts Thursday. The plans are for that operation to be combined into its main Union Square store.
The company posted earnings of $11 million, or 3 cents per share, compared with $217 million, or 64 cents, made in the second quarter of 2015 because of the cost associated with store closings.
Excluding the charges, Macy’s earned 54 cents per share.
Research firm Green Street Advisors has estimated that department stores need to shutter roughly 800 locations, or about a fifth of all mall anchor space, to regain the sales productivity they had a decade ago. 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. That’s the sixth straight decline for that measure. The stock had slipped 2.8 percent this year through Wednesday.
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Looking ahead, the company said it remains confident in its previous guidance for the full year 2016.
