Macy’s To Close 150 Stores — 30% Of Its Namesake Chain — As New CEO Takes Helm

Macy’s has announced plans to close 150 stores, which accounts for roughly 30% of its US-based namesake chain, as part of a strategic shift towards emphasizing luxury products under its new CEO.

The company disclosed in a filing on Tuesday that these closures, expected over the next three years, will unlock approximately $750 million in real estate assets, enabling Macy’s to concentrate on expanding its high-end brands.

Over the same period, Macy’s intends to introduce 15 new outlets of its upscale Bloomingdale’s stores and 30 additional Bluemercury locations, its luxury cosmetics brand, as reported by Bloomberg.

This move signifies yet another reduction for Macy’s, which previously operated 870 stores as recently as 2019, with 643 of them being Macy’s locations.

The decision comes shortly after Tony Spring assumed the role of Macy’s CEO, bringing with him extensive executive experience from Bloomingdale’s spanning four decades.

“Inflation is still up even if it’s not as high as it was. We’re going to have to fight for our fair share and fundamentally reposition the business for growth,” Spring remarked, according to Bloomberg.

The exact number of employees impacted by the impending closures remains unclear, although Macy’s stated in its filing that it anticipates a $50 million charge related to termination expenses.

Many of the targeted locations are situated near other Macy’s outlets, potentially allowing some employees to transition, Bloomberg noted. “The shopper is still under pressure,” Spring emphasized.

By 2026, Macy’s aims to open 15 new Bloomingdale’s and 30 new Bluemercury stores across the country, further indicating its focus on luxury expansion.

The retail giant currently operates around 500 stores nationwide and has been contending with pressure from activist investors seeking to acquire the company for $5.8 billion, a proposition Macy’s declined last month, purportedly due to valuation concerns.

Arkhouse Management, one of the activist firms, recently nominated nine candidates for Macy’s board after the retailer rejected a bid to go private from Arkhouse and Brigade Capital.

Arkhouse disclosed additional financing details, including the involvement of reputable equity partners with over $75 billion in combined assets under management, for the proposed transaction’s 50% equity component.

Macy’s, now in its 166th year of operation, has faced challenges stemming from subdued demand amid persistently high inflation and elevated borrowing costs.

The company’s fourth-quarter results, released on Tuesday, revealed a nearly 2% decline in sales during the crucial holiday season, with revenue totaling $8.12 billion, slightly below Wall Street’s expectations of $8.15 billion.

Looking ahead, Macy’s anticipates 2024 to be a year marked by “transition and investment,” projecting adjusted earnings of $2.45 to $2.85 per share—below analysts’ estimates and weaker than last year’s outlook.

The latest Consumer Price Index indicates a higher-than-anticipated inflation rate of 3.1% in January, dampening expectations on Wall Street for an early interest rate cut, with the Bureau of Labor Statistics scheduled to release February’s CPI report on March 12th.

{Matzav.com}