Macy’s said Tuesday that it will fundamentally revamp its strategy and retail presence, closing about 150 Macy’s stores over the next three years while expanding its upscale Bloomingdale’s and Bluemercury chains.
The moves marked efforts by the company’s new chief executive, Tony Spring, to keep the largest department store operator in the United States profitable and fend off an impending takeover bid.
It’s the Macy’s chain’s second major downsizing since 2020 and the company will have 350 stores, just over half its pre-pandemic number.
The overhaul is intended to “accelerate our path to market share gains, sustainable, profitable growth and value creation for our shareholders,” Mr. Spring, who took over this month, said in a statement.
Macy’s said it planned to close “underproductive locations,” noting that they accounted for 25 percent of the company’s total square footage but only 10 percent of sales. The company expected to raise $600 million to $750 million from selling those stores and streamlining some of its warehouses.
The company said it would begin notifying workers at stores scheduled to close on Tuesday. It plans to close about 50 stores this fiscal year and the rest by the end of 2026.
While Macy’s stores are closing, the company plans to open 15 Bloomingdale’s stores. Bluemercury, its cosmetics chain, will add 30 stores while remodeling others. As of November, there were 58 Bloomingdale’s and 158 Bluemercury locations.
“There’s less competition there, but the problem is that it’s not clear that the luxury department store really has a great future,” said David Swartz, a retail analyst at financial services firm Morningstar. “Many luxury labels do their own direct sales.” He noted that the luxury chain Nordstrom has closed stores in recent years.
The company will open its smaller Bloomingdale’s stores – known as Bloomie’s – and outlet stores in 15 markets over the next three years, Mr. Spring said in a call with analysts.
In recent years, the company has opened smaller stores in outdoor malls rather than indoor malls that have lost customers.
“That’s where the whole market is going,” Mr. Swartz said. “It makes sense for Macy’s to open stores in these smaller locations, but is it too late? There are already other companies doing the same thing, and will Macy’s actually stand out from the crowd and make up for the loss in sales that they will incur from closing 150 stores?”
The decision to downsize the midsize Macy’s chain while increasing the presence of luxury chains is a sign that Mr. Spring wants to reposition the company’s overall image so that consumers see it as an upscale destination.
Customer surveys showed that people wanted a better shopping experience at Macy’s, whether through improved visual merchandising or more help from store associates, the company said. The savings the company expects from this strategy, including the sale of some of its assets, could help finance such improvements.
Mr. Spring, who spent four decades at Bloomingdale’s, took the helm of the company at a challenging time. In December, a group of investors submitted a bid that would take Macy’s private in a deal valued at $5.8 billion. Investors Arkhouse Management and Brigade Capital Management said they might accept their offer to shareholders if the retailer doesn’t start sharing nonpublic information with them.
Sales fell as Macy’s struggled to attract the next generation of shoppers and compete in an increasingly e-commerce-focused world.
Mr. Spring had already begun to make a name for himself. In January, a memo to employees from him and outgoing CEO Jeff Gennette said the company would cut about 2,300 jobs, or 13 percent of its workforce, as it wanted to better align its resources with customer behavior and improve decisions more quickly. The company also said it plans to close a handful of stores.
The last major restructuring at Macy’s took place in February 2020, when the company announced it would close 125 stores and cut 2,000 jobs. Then the pandemic left many stores dark for weeks, forcing the retailer to look at improving its website and e-commerce offerings and figuring out how to lure people back into stores once they reopen.
After an initial boost in sales driven by consumer spending on all types of items at the start of the pandemic, Macy’s saw its sales plunge.
On Tuesday, the company also reported fourth-quarter results, which included the holiday shopping season. Net sales of $8.1 billion were in line with analysts’ estimates. Sales at both Macy’s and Bloomingdale’s fell from a year ago, while those at Bluemercury rose 2.3 percent, a sign that shoppers are gravitating toward the beauty and skin care categories.
Source link
2024-02-27 13:25:15
www.nytimes.com
