A ‘Barron’s Roundtable’ panel provides insight into investments in Macy’s, Nordstrom and Gilead Sciences.
Macy’s, which has launched a global strategy to revive its struggling business, announced Wednesday that it is accelerating its planned store closures for the year.
CEO Tony Spring told analysts on an earnings conference call that Macy’s now expects to close about 65 locations this year, up from its previous forecast of 50 announced at the start of the year.
However, Spring added that “the closures will occur after the holidays.”
The company remains on track with plans to close 150 locations over three years as part of its “Bold New Chapter” strategy, announced in February.
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The goal, according to Spring, is to access a fleet that “can provide sustainable and profitable growth for the business.”
CFO Adrian Mitchell reiterated that the company only closes underperforming stores.
A woman shops at Macy’s Herald Square in New York on November 25, 2022. (Reuters/Brendan McDermid / Reuters Photos)
“These are places where the economic situation is not as favorable. These are places where customers have left these centers to shop. And these are stores that are just incredibly difficult to run. So I’m going to start by this fundamental premise,” says Mitchell.
He went on to say that “very few stores are actually in single-store markets.” And the reason it’s important is because in a ubiquitous business, we continue to see that when we have a physical presence and a digital presence, by far, we have the best economics.”
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The company previously announced it would only have 350 stores once all planned closures were implemented. It also announced it would add about 45 Bloomingdale’s and Bluemercury locations simultaneously. Both brands continued to show sales growth.
Part of the company’s strategy includes revamping 50 key stores, also known as the “First 50,” which it aims to use as a model for the next generation of Macy’s stores. Mitchell said the company was already encouraged by the performance of the “top 50” stores. Sales at these stores increased 1.9% in the third quarter.
On Wednesday, Spring announced that the company plans to open nine additional new stores and remodel two more stores in the fourth quarter.
People walk past a large Macy’s billboard on a building across from Macy’s Herald Square store in New York on October 8, 2021. (Gary Hershorn/Getty Images/Getty Images)
Activist investor Barington Capital Group said earlier this week that it sees “a promising new plan as it calls for the closure of a significant number of very low-productivity Macy’s locations.”
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“We believe this action, coupled with further cost reductions the company plans to implement, will result in a healthier store base that can begin to deliver consistent revenue growth and improved profits,” said Barington Capital Group.