Macy’s has announced plans to close more stores by the end of 2024 than it initially anticipated, as part of its ongoing “Bold New Chapter” strategy, which emphasizes luxury growth and operational modernization. This announcement was made by Macy’s Chairman and CEO Tony Spring during a third-quarter investor call.
Earlier this year, it was reported that the department store chain would close approximately 150 locations by 2026, with 50 to 55 closures expected in 2024. However, Spring indicated that the company now expects to close around 65 stores by the end of 2024. These additional closures are anticipated to take place following the holiday season.
As part of its transformation, Macy’s is committed to upgrading 350 locations, with the first 50 renovations starting in 2024. Interestingly, the company has introduced popular new brands like SKIMS and Jenni Kayne into its stores, which have seen success. Additionally, the sales of designer handbags, including those from Tory Burch and Coach, indicate a positive trend in the luxury segment.
In a move to modernize its retail approach, Macy’s has opened a number of smaller-format stores nationwide, particularly designed to fit in strip malls rather than large shopping malls. To date, 24 small-format Macy’s stores have opened across the U.S., including “Bloomie’s,” smaller versions of Bloomingdale’s.
The retailer had also faced a setback recently when it discovered a former employee had concealed $151 million in delivery expenses over two years, leading to a revision of several financial statements. Despite this issue, Macy’s reported that it would not materially affect their overall finances.
The company has acknowledged challenges with its profit and sales, particularly in light of cautious consumer spending and competition. It has had to adjust its profit forecasts downwards, now estimating earnings at $2.25 to $2.50 per share for the year, a decrease from earlier expectations. However, Macy’s has raised its sales forecast, projecting between $22.3 billion to $22.5 billion for the year compared to previous estimates.
Macy’s is optimistic about the performance of its “First 50” upgraded stores, which have seen a 1.9% increase in same-store sales, and Spring expressed hope for continued growth across the portfolio as sales trends improve.
In summary, while Macy’s faces some challenges, it is proactively restructuring to foster growth in the luxury market and enhance customer experience. The strategic focus on upgrading store formats and introducing new brands suggests a hopeful direction for the company amid evolving retail dynamics.