People shop at Macy’s Herald Square store in New York City, January 19, 2024.
Michael M. Santiago | Getty Images News | Getty Images
As Macy’s To pursue sales growth, the department store operator said Tuesday it would close about 150 of its namesake stores and open more stores with better locations or with luxury goods.
The changes reflect a focus on what works and what doesn’t at Macy’s — upscale department store Bloomingdale’s and beauty chain Bluemercury. the shops of the same name, especially those in struggling malls. In its holiday quarter results released Tuesday, the retailer said its Macy’s department stores performed worse than Bloomingdale’s and Bluemercury.
When it released its results, Macy’s shared its strategy going forward. The strategy shift comes weeks after former Bloomingdale’s CEO Tony Spring took over as CEO of Macy’s on February 4.
Macy’s announced in January that it would close five stores of the same name and lay off more than 2,300 employees.
In a CNBC interview on Tuesday, Spring said the company is changing its store footprint after taking a close look at which stores are in the right locations and which are not.
“We have some businesses that are just underproductive or not that profitable, and we need to address that,” he said. “Conversely, we have businesses that are highly productive and highly profitable. We have markets, stores and centers that we are not in today that we would like to be in.”
Here’s a closer look at Macy’s top store announcements, broken down by private label.
Macy’s
A customer leaves the flagship Macy’s department store in Herald Square in New York City, December 11, 2023.
Brendan Mcdermid | Reuters
Sales at Macy’s namesake stores have lagged the most – and that store will see the biggest changes.
The company plans to close about 150 stores, including 50 that will close by early 2025. The company did not disclose those locations but said they were “unproductive.”
One of the stores Macy’s plans to close is its massive 400,000-square-foot flagship in the heart of San Francisco’s main shopping district, Union Square, if it finds a buyer for the location, Marisa Rodriguez, CEO of the Union Square Alliance business group, told CNBC in a statement . However, Rodriguez noted that Macy’s may remain open for months and through the holiday season because the search for a buyer may not be quick.
The stores already said would be closing are in Arlington, Virginia; San Leandro, California; Lihue, Hawaii; Simi Valley, California and Tallahassee, Florida. The stores will close in early 2024.
On the other hand, Macy’s said it would increase investment in the roughly 350 namesake locations that remain open.
For example, Spring said in an interview with CNBC that the company is testing how it can improve customer service in 50 of its stores. In the last quarter, these locations hired new employees or moved them into other roles, such as providing more support in the locker room and shoe departments.
The company is also moving forward with its strategy of opening smaller Macy’s stores in suburban shopping centers. Last year the company said it would open up to 30 stores in the next two years. The locations are about a fifth the size of traditional shopping centers.
Spring told investors on a conference call that there is a clear difference between the Macy’s stores the company is closing and those that are staying open. The 150 stores that will close represent 25% of Macy’s space but less than 10% of sales, he said.
“They are underproductive and we need to focus on making sure we have the best stores, not the largest number of stores,” he said on the earnings call.
He said a team at Macy’s spent about six to seven months evaluating stores based on other factors, including customer demographics, digital demand and the condition of the store or mall, in addition to considering economics.
As of February 4, Macy’s had about 500 namesake stores. Most are typical strip malls, but they also include some smaller stores and freestanding Macy’s Off-Price Banner Backstage locations.
Bloomingdale’s
Bloomingdale’s, which has surpassed Macy’s namesake stores, will soon have more stores.
The retailer plans to open about 15 new Bloomingdale’s stores over the next three years. The exact locations were not announced, but it was said some would be in new markets.
The upscale department stores are aimed primarily at higher-income and fashion-conscious shoppers and carry many popular luxury brands.
Like its sister brand Macy’s, Bloomingdale’s has been testing a smaller concept store called Bloomie’s.
At the end of its last fiscal year, Bloomingdale’s had 33 locations. There are also three Bloomie’s stores and 21 outlets.
Blue mercury
Bluemercury was the bright spot in the retailer’s performance: It was the only brand of the three to record comparable sales growth in the fourth quarter.
The beauty chain will also get bigger in the next few years. Parent company Macy’s said it will open at least 30 new Bluemercury stores over the next three years, some in new markets. In addition, around 30 existing stores will be renovated during this time.
Bluemercury has tested a new store prototype that includes more spa services. The concept was introduced in two locations: New Canaan, Connecticut and Bronxville, New York.
Macy’s acquired Bluemercury in 2015 for $210 million. As of February 4th, the cosmetics chain has 159 locations.
— CNBC’s Gabrielle Fonrouge contributed to this report
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2024-02-27 19:58:04
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