Macy’s Closing 125 Stores, Shuttering Offices in Realignment

Macy’s Inc. announced plans to close 125 stores within three years in an effort to regain its groove amid an ongoing shopper flight from malls and department stores, while consolidating its headquarters in New York and cutting 2,000 corporate jobs as it looks to boost digital growth.

This will leave about 400 Macy’s stores in place, and just under 40 Bloomingdale’s locations. About 30 stores will close in 2020, including one Bloomingdale’s. Macy’s is certainly not alone: department store chains JC Penney and Kohl’s continue to struggle after a challenged holiday season. But this cutback is on a far larger scale.

While the store closings are being presented as a realignment and growth strategy, the Wall Street Journal called the closings “an admission that a fifth of its locations cannot thrive as shoppers buy more online and make fewer trips to malls.”

A release posted on Macy’s corporate site described a vision to continue “growth treatment” of stores in the best malls, while also pursuing new off-mall formats.

Macy’s will upgrade 100 locations in 2020, including improvements to physical stores and investments in merchandising strategies, technology, talent and local marketing. These measures have been implemented in 150 outperforming doors that account for approximately 50% of 2019 store sales, according to Macy’s.

The new off-mall store format, Market by Macy’s, involves 15,000-square-foot locations, about a tenth of the size of its department stores. They will feature a mix of curated merchandise and local goods, food and beverages and events. The first Market by Macy’s is scheduled to open Feb. 6 in Dallas.

Macy’s will also continue to expand its off-price offerings, Backstage and Bloomingdale’s The Outlet over the next three years, adding 50 Backstage store-within-a-store locations in 2020 and seven freestanding, off-mall Backstage stores.

“We have a clear vision of where Macy’s, Inc. and our brands, Macy’s, Bloomingdale’s and Bluemercury, fit into retail today,” said Jeff Gennette, chairman and CEO of Macy’s in a release. “We are confident in our Polaris strategy, and we have the resources required to return Macy’s, Inc. to sustainable, profitable growth.”

Macy’s is projecting fourth quarter sales of $8.3 billion for the period ended Feb. 1, 2020, a decline of 0.6% in same-store sales and a drop of 0.5% in owned plus licensed locations, and estimating 2019 revenue at $24.5 billion, down 0.8% and 0.7%, respectively. The company has remained profitable despite declining sales.

Guidance for the “transition year” of 2020 calls for negative comps and total net sales in the $23.6 billion to $23.9 billion range, as the company implements its many-pronged strategy and anticipates “continued challenges in mall-based retail.”

In terms of its headquarters, Macy’s plans to close its San Francisco, downtown Cincinnati and Lorain, OH offices, as well as its Tempe, AZ customer contact center, consolidating the latter operations at its Mason, OH and Clearwater, FL facilities.

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