Macy’s, once a retail giant, now faces a stark reality: closing 150 stores to survive in the digital age.
It’s an American institution, and it’s dying!
At a Glance
- Macy’s plans to close 150 stores over the next three years, with 65 closures by the end of 2024
- The company is shifting focus to luxury growth and modernizing operations
- Sales dropped 2.4% in Q3, with shares down 15% for the fiscal year
- An employee scandal involving hidden expenses of $154 million over three years has impacted financial results
- Macy’s is pivoting towards e-commerce and upgrading remaining stores to boost profitability
The Fall of a Retail Giant
Macy’s, a household name in American retail, is facing a harsh reality in the evolving landscape of consumer shopping habits. The company has announced plans to shutter 150 stores over the next three years, with 65 locations set to close by the end of 2024. This drastic measure comes as Macy’s grapples with falling profits, declining sales, and a notable drop in stock prices.
It’s tragic.
The closures are part of Macy’s “Bold New Chapter” strategy, which aims to focus on luxury growth and modernize operations. After these closures, Macy’s will have just 350 stores remaining, a stark contrast to the 1,100 locations it operated in 2008. This significant reduction in physical presence underscores the challenges traditional retailers face in the age of e-commerce.
Iconic department store chain Macy’s today announced that it is preparing to close 150 stores after a disappointing holiday quarter. The retailer said it did not yet have a list of doomed locations to share. https://t.co/DWO9GQUEFi
— Fast Company (@FastCompany) February 28, 2024
Financial Woes and Strategic Shifts
Macy’s financial troubles are evident in its recent performance. The company reported a 2.4% drop in sales for the third quarter, and its shares have plummeted by 15% for the fiscal year. Adding to the retailer’s woes, an employee scandal involving hidden expenses of $154 million over three years has further impacted financial results and eroded investor confidence.
“We are encouraged by the consistent sales growth in our Macy’s First 50 locations and the strong performance of Bloomingdale’s and Bluemercury,” CEO Tony Spring said. “Quarter-to-date, comparable sales continue to trend ahead of third quarter levels across the portfolio.”
Despite Spring’s optimistic outlook, the company has been forced to adjust its earnings forecast downward. Macy’s now projects earnings per share of $2.25-$2.50, a decrease from the previous estimate of $2.34-$2.69. However, the company has slightly increased its sales projection to $22.3-$22.5 billion, indicating a complex financial picture.
As Macy’s closes underperforming stores, it is desperately trying to reinvent itself in order to survive. The company plans to upgrade 350 remaining stores, starting with 50 locations in 2024. This initiative, known as the “First 50” strategy, has already shown promise with a 1.9% increase in same-store sales for participating locations.
Macy’s is also experimenting with new formats to meet changing consumer preferences. The company has introduced “small-format” stores, which are about one-fifth the size of traditional locations, in various areas including Chicago. These smaller stores aim to provide a more focused and efficient shopping experience while reducing operational costs.
Additionally, Macy’s is doubling down on its luxury offerings. The strategy includes introducing new high-end brands and improving designer handbag selections. This pivot towards luxury is evident in the strong performance of Bloomingdale’s and Bluemercury, Macy’s upscale subsidiaries.
So Macy’s could either be gone real soon, or it could look dramatically different.
