Macy’s said it plans to shutter 100 more stores, representing about 14 percent of its total, as it tries to turn around its business after six quarters of falling sales. However, Macy’s board has not yet finalized which stores will eventually shut down, a decision that will see most stores make it until the end of the fiscal year. No timeline was proposed for this announcement.
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Macy’s also announced second quarter results Thursday – sales fell 3.9 percent to about $5.9 billion, beating analyst expectations for sales of $5.8 billion, according to S&P Global Market Intelligence.
Most of the closures will occur early next year and involve an unspecified number of job cuts, Macy’s said. Numerous stores will close in early 2017, with the balance closing as leases or other agreements expire or are amended.
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. The increasing tendency for consumers to shop online and the decreasing appetite to spend money on apparel are among the things that have led to the significant losses suffered by Macy’s and other major apparel-heavy retailers. That’s almost 4 percent of Macy’s total annual sales in 2015.
Other retailers too have have heavily in e-commerce efforts, while brick and mortar stores had resorted to sharp discounting that temporarily lifted sales but hurt profits.
“It’s all about creating the experience in the store”, said Saks Fifth Avenue president Marc Metrick.
Numerous stores targeted for closure are expected to be shut early next year, with others closing as leases or other agreements expire or are amended, the company said.
The nation’s largest department store chain said that it earned $11 million, or 3 cents per share, in the quarter ended July 30.
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The 100 closures, about 15 percent of Macy’s 675 full-line locations, are only the latest round of closures Macy’s has done in recent years to cast off stores where profitability has waned. Some on Wall Street have even hinted at the idea of more share buybacks or a dividend hike if the real estate sales of these locations go well, but management didn’t discuss how the company will use the proceeds. Nordstrom breaks down its sales with 2.3 percent same-store sales decline at its full-price department stores and a 5.3 percent gain at its Nordstrom Rack stores. The store closures announced Thursday, which were not specified, have net sales of $1 billion, the AP said.
