Macy’s has announced plans to close 65 stores by the end of this fiscal year, an increase from the previously projected 50 closures. This move is part of a broader initiative to shut down approximately 150 unprofitable locations over the next three years. The news was shared during Macy’s third-quarter earnings call.
CEO Tony Spring stated, “We now expect to close roughly 65 locations this year.” He noted that, as is customary, these closures would take place after the holiday season.
The retailer experienced a delay in reporting its third-quarter earnings due to the discovery of significant accounting irregularities linked to the expenses of small package deliveries. An internal review revealed that a single employee had manipulated accounting records, inflating expenses by $151 million. The company emphasized that this incident was not theft, and it did not affect revenue or inventory, confirming that all vendors were fully compensated.
In response to this issue, Macy’s is implementing changes to enhance its financial reporting controls.
The challenges faced by Macy’s reflect a larger trend in the retail industry, where many department stores are struggling with declining foot traffic as consumers increasingly turn to online shopping. Recent data indicates that U.S. retailers have announced over 7,100 closures through the end of November 2024, marking a 69% increase compared to the previous year. The retail sector has also seen a rise in bankruptcies, with 45 retailers filing for bankruptcy protection in 2024.
However, Macy’s is focusing on its other brands, Bloomingdale’s and Bluemercury, planning to open 15 new Bloomingdale’s locations and 30 Bluemercury stores in the next three years. Additionally, around 30 existing Bluemercury stores will be remodeled. While Macy’s stock has decreased by approximately 20% over the past year, the company maintains an optimistic outlook by revitalizing its brand portfolio.
In summary, while Macy’s faces challenges common to the retail industry, its strategic focus on opening new stores in successful brands offers a hopeful pathway towards recovery and revitalization. The ongoing adjustments in store strategies could place Macy’s in a more competitive position in the evolving retail landscape.