Feb 27, 2024 - Business

Macy's stores closing plan is déjà vu from 2020

Illustration of a storefront with a logo reading "closed" with two stars

Illustration: Sarah Grillo/Axios

Macy's is getting even smaller as it continues to deal with declining sales and activist investors who want the company to sell itself.

Why it matters: The announcement Tuesday that it will close another 150 stores in the next three years is déjà vu for the department store chain.

  • The plan came after Arkhouse Management last week nominated nine candidates to the Macy's board, which had rejected Arkhouse's $5.8 billion takeover offer, Axios' Dan Primack notes.

The big picture: The store closures will leave the company with about 350 full-size Macy's department stores — which is fewer than half what it had a decade ago.

  • The company is acknowledging "a need to revitalize" its stores "to appeal to younger and existing customers," TD Cowen analyst Oliver Chen wrote Tuesday in a research note.

By the numbers: The retailer's sales in the last fiscal year were down 8% from 2017, a period during which U.S. spending on apparel, home and beauty products rose 33.5%, according to GlobalData retail analysts.

  • "This represents a massive loss of market share," GlobalData managing director Neil Saunders wrote Tuesday.

Context: The department store sector has been reeling for years, struggling to compete with nimbler big-box chains, fast-fashion retailers and digital competitors.

  • The industry has seen the bankruptcies of stalwart chains such as Sears, JCPenney and Neiman Marcus.

Flashback: In early 2020, before the pandemic, Macy's said it would close around 125 stores over three years, which at the time was a fifth of its locations.

  • Macy's fell short of its target and closed 80 namesake stores. It's currently closing another five stores before the future closing rounds begin.

Closing stores, opening others

In addition to the store closures, Macy's said it would open at least 30 new Bluemercury stores and 15 new Bloomingdale's locations as it seeks to amp up its luxury game.

  • The plan represents a big first step by CEO Tony Spring to make over the company after taking the reins from longtime CEO Jeff Gennette less than a month ago.
  • The stores slated to close represent a quarter of gross square footage for Macy's Inc., but they account for less than 10% of sales, Spring said during a call with analysts Tuesday.

Yes, but: Macy's has introduced new smaller format stores and off-mall locations in recent years and has plans to grow these formats.

What they're saying: "A smaller footprint will allow management to direct capital and attention to its best performing assets and, if it executes its plans effectively, optimize future growth," Fitch Ratings senior director David Silverman said in a statement.

Macy's store closing list

Macy's has not released a list of closing stores as part of its new plan.

Our thought bubble: The retailer typically announces closings after the holiday shopping season, which has been the case in recent years, including in January 2023.

In early 2020, before the pandemic, Macy's said it would close around 125 stores over three years, which at the time was a fifth of its locations.

  • Macy's fell short of its target and closed 80 namesake stores. It's currently closing another five stores before the future closing rounds begin.

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