Macy’s to close 150 stores as it bets on luxury brands

Macy’s plans to close

150 department stores and prioritize its luxury brands as it seeks to reinvent itself amid flagging sales.

The company plans to have a smaller footprint of 350 locations as it trims the “unproductive” stores, it announced Tuesday. It also expects to expand its luxury store footprint by 20 percent with 30 new Bluemercury stores and 15 stores under the Bloomingdale’s umbrella, including Bloomingdale’s outlets and smaller Bloomie’s locations.

For the Macy’s-branded stores, the company plans to invest more in smaller locations. The company has 12 small-format Macy’s stores and previously said it would open 30 more over the next two years.

Macy’s has not yet publicly identified specific stores to be closed. But the 150 stores generate less than 10 percent of the company’s overall sales, even though they represent 25 percent of the company’s gross square footage, chief executive Tony

Spring said during a call with analysts.

“We have to focus on making sure that we have the best stores, not the largest number of stores,” Spring said.

Executives say the new stores will have new merchandise assortments and better visual presentations. Increased staffing is planned for certain areas, such as women’s shoes and ready-to-wear.

With Bluemercury, Macy’s is betting on one area of discretionary spending that seems to have held up. Sales in the beauty sector rebounded in recent years, with retailers such as Ulta and Sephora reporting positive results in 2023.

Overall sales at Macy’s namesake department stores were down 2.5 percent in the fourth quarter of 2023 compared with the same period a year earlier. Bloomingdale’s and Bluemercury did well by comparison, gaining 3.5 percent and 7.8 percent, respectively.

Like other retailers, the company has suffered from a “middle-market” pullback among consumers, said Neil Saunders, a retail analyst with GlobalData. But the company has also suffered because of its “poor presentation and assortments,” Saunders said, and it has lost market share in core areas of its business, including apparel and home goods.

“It will be a long, hard slog to stop and reverse all the rot that has infected the Macy’s brand over many, many years,” Saunders said.

The company posted a $71 million loss in the most recent quarter, driven by restructuring costs.That compares with a $508 million profit in the same quarter a year earlier.

Macy’s has been facing a takeover attempt from two investment firms, Arkhouse Management and Brigade Capital Management, which launched a proxy battle to get seats on the Macy’s board after management rejected a $5.8 billion acquisition offer.