Macy’s Inc. announced August 11 that it will close about 100 of its full-line department stores out of the company’s total portfolio of 728 stores, with most closing at the beginning of 2017, said Jim Sluzewski, senior vice president for corporate communications and external affairs, in a news release.
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Karen Hoguet, Macy’s chief financial officer, said most of the stores being closed are “underperformers, or are in weak locations”. That represents close to 14 percent of its 728-store base.
The company, which operates Bloomingdale’s stores as well, said it would increase its exclusive products and would prioritize its investments in the stores that offer the highest growth potential.
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.
Sales in stores open at least a year, including sales in departments licensed to third parties, fell 2 percent in the latest quarter.
Consumers are also spending more on big-ticket items such as electronics and cars than they are on clothes, further pressuring sales at department stores.
Analysts said the store closures and other recent initiatives were steps that would help Macy’s recover but some said there were still issues that needing addressing.
Numerous stores will close in early 2017, with the balance closing as leases or other agreements expire or are amended.
Last November Macy’s said it would seek partners to redevelop the Minneapolis real estate and the other flagship locations to add other uses to the retail operations.
Macy’s will focus its resources on its highest-performing stores while pouring more into “online shopping and mobile apps”, according to the press release.
“We are encouraged by the fact that Macy’s sees this move as part of a wider program to reinvent itself and will direct the savings from shuttered stores into its remaining locations”, Neil Saunders, CEO of retail research firm Conlumino, wrote in a note Thursday.
It’s unclear whether the closures will impact any of Macy’s stores in Tennessee.
Assuming the sale goes through, Macy’s will build a new men’s department within its main San Francisco Union Square store.
Macys reported that profits fell to $11 million, or 3 cents a share, last quarter, down from $217 million, or 65 cents a share, in the same period a year ago. That compares with $217 million, or 64 cents per share, a year earlier.
Shares of the company, which also reported a smaller-than-expected drop in quarterly sales at established stores, were up 11 percent at $37.79 in premarket trading on Thursday.
Excluding charges that are related to store closings, the company earned 51 cents, which is above the 48 cent estimate from FactSet.
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Macy’s expects full-year earnings in the range of $3.15 to $3.40 per share.
