Macy’s, Inc. plans to close 100 stores or about 15 percent of its locations.
A final decision on locations to be closed has not yet been made. Macy’s has been steadily closed stores in recent years and claimed the newest locations to be shuttered are profitable.
Macy’s has three Delaware stores at Concord Mall, Christiana Mall and Dover Mall. Delaware stores often survive cutbacks, thanks to the state’s lack of a sales tax. However, the scope of the closings may leave no market untouched.
Remaining stores will get a makeover as the company intensifies its push into online retailing.
The retailer had mixed success in combining Macy’s with Federated Department Stores, along the way changing the names of stores such as Marshall Fields Hudson’s , Strawbridge and Clothier to Macy’s.
The moves left a large hole in Christiana Mall as stores that competed with Macy’s were closed. The mall underwent a major renovation that resulted in Target and Nordstrom building stores.
“We operate in a fast-changing world, and our company is moving forward decisively to build further on Macy’s heritage as a preferred shopping destination for fashion, quality, value and convenience. This involves doing things differently and making tough decisions as we position ourselves to serve customers who have high expectations of their favorite stores, online sites and apps,” said Terry J. Lundgren, Macy’s, Inc. CEO.
“The announcements we are making today represent an advancement in our thinking on the role of stores, the quality of the shopping experience we will deliver, and how and where we reinvest in our business for growth. In the short term, our company’s topline sales will be somewhat smaller, but the changes being made will position us to grow comparable sales more quickly and generate a level of profitability that stands out among retailers,” said Jeff Gennette, Macy’s, Inc. president, who is designated to succeed Lundgren as chief executive officer in the first quarter of 2017.
While maintaining a presence in 49 of the top 50 U.S. markets, Macy’s will operate fewer stores and concentrate its financial resources and talent on our better-performing locations to elevate their status as preferred shopping destinations, a release stated.
Most of these stores will close early in 2017, with the balance closing as leases and certain operating covenants expire or are amended or waived. In a number of cases, stores will be closed if the value of the real estate exceeds their value to Macy’s as a retail store.
“Customers nearly everywhere in America will have easy access to Macy’s stores, with the additional convenience and increased functionality of our dynamic digital offering,” Gennette stated.
“Nearly all of the stores to be closed are cash flow positive today, but their volume and profitability in most cases have been declining steadily in recent years. We recognize that these locations do not yield an adequate return on investment and often do not represent a customer shopping experience that reflects our aspirations for the Macy’s brand. We decided to close a larger number of stores proactively so we can invest in a winning customer experience in our most productive and highest-potential locations, as well as invest in growth sooner and more aggressively in digital and mobile,” Gennette said.
In remaining stores, Macy’s will be adding new vendor shops, bringing new businesses onto the sales floors through additional license agreements, increasing the size and quality of staffing through programs such as My Stylist personal shopping services, using new technology, pushing higher-margin businesses such as fine jewelry, and creating new in-store events and experiences.
Macy’s, Bloomingdale’s and Bluemercury also are reinvesting in digital sales.
The company’s online business has grown at a compounded double-digit rate in each of the past 15 years, placing Macy’s, Inc. sixth on an independently published list of America’s largest-volume online retailers.
Macy’s and Bloomingdale’s Buy Online Pickup in Store offering, introduced in 2013, is being refined to improve speed and convenience of the customer experience.
