MACY’S DOWNSIZE
Closing 150 locations under new chief exec
Macy’s said it will shut down 150 stores — about 30% of its US namesake chain — as the departmentstore giant tightens its focus on luxury under a new chief executive.
The retailer said in a Tuesday filing that the closures slated to take place over the next three years will free up as much as $750 million worth of real estate assets as the department-store chain focuses on growing its luxury brands.
During the same three years, Macy’s plans to add 15 new outposts of its higher-end Bloomingdale’s stores, as well as 30 locations for Bluemercury, its luxury cosmetics brand. The company also will upgrade existing Macy’s locations and open smaller versions of Macy’s stores.
It’s the latest downsizing for Macy’s, a once-sprawling chain that operated 870 stores as recently as 2019, including 643 Macy’s locations.
The move also comes less than one month into the tenure of Macy’s new chief executive, Tony Spring, who took the helm following a four-decade career holding executive positions at Bloomingdale’s.
Ready to fight
“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 said, according to Bloomberg.
It wasn’t clear how many employees would be affected by the looming closures, although Macy’s said in its filing that it would incur a $50 million charge related to termination costs.
Many of the locations that are set to close are located near other Macy’s locations, meaning some workers could transfer, according to Bloomberg News.
“The department-store sector is half the size in terms of revenues than it was in 2010,” said Craig Johnson, president of Customer Growth Partners, a retail consulting firm. “If you want to survive you have to shrink your fleet to keep up with the decline in the overall market.”
Representatives for Macy’s — which has some 500 stores nationwide — did not respond to a request for comment.
Macy’s has been fighting off a pair of activist firms looking to buy the company for $5.8 billion — a deal Macy’s rejected last month, reportedly over valuation concerns.
Arkhouse Management announced nine director candidates for Macy’s board last week — shortly after the retailer rejected a go-private bid from Arkhouse and its partner Brigade Capital.
“If it hadn’t been for the activists there wouldn’t be this urgency or the scale of these moves,” Johnson said. “Macy’s is also doing what’s right for the shareholders. It needs to happen quickly. Yes, they are fending off the activists, but it’s also what needs to happen.”
Arkhouse said last Tuesday it had provided additional financing details, including names of highly regarded equity partners — which have more than $75 billion in combined assets under management — for the 50% equity component of the transaction.
Macy’s fourth-quarter results posted Tuesday showed sales fell nearly 2% to $8.12 billion in the allimportant holiday quarter.
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