Macy’s has announced its plans to close 65 stores this year, an increase from the 50 closures it previously projected for the fiscal year. This decision is part of a broader strategy to eliminate around 150 underperforming locations over the next three years. The announcement was made during Macy’s third-quarter earnings call.
CEO Tony Spring stated, “We now expect to close roughly 65 locations this year,” adding that, in line with company policy, the closures will take place after the holiday season. The update follows a recent delay in reporting Macy’s third-quarter earnings due to an internal issue involving improper financial reporting concerning small package delivery expenses, amounting to up to $151 million.
An independent investigation revealed that a single employee was responsible for this financial mismanagement, with no impact on the company’s revenues, cash, or inventory because all vendors were fully compensated. Macy’s Chief Operating Officer Adrian Mitchel clarified that this incident did not constitute theft, and the company is now enhancing its financial reporting controls.
The trend of department store closures is part of a broader retail challenge, as physical stores struggle with decreased foot traffic and a shift towards online shopping. According to research from CoreSight, U.S. retailers have announced over 7,100 store closures through November 2024, marking a 69% increase from last year. Additionally, 45 retailers have filed for bankruptcy in 2023, compared to 25 the previous year.
Despite these challenges, Macy’s remains optimistic about its future. The company plans to focus on its other brands, including Bloomingdale’s and Bluemercury, with plans to open 15 Bloomingdale’s stores and 30 Bluemercury locations over the next three years, along with remodeling around 30 existing Bluemercury stores.
While Macy’s stock has seen a decline of approximately 20% over the past year, the company’s proactive strategies and focus on its core brands may position it for a stronger recovery as it navigates the evolving retail landscape.
In summary, Macy’s is taking significant steps to adapt to current market conditions by closing underperforming locations while also investing in growth opportunities within its successful brands. This could pave the way for a more sustainable business model in the future, even in the face of broader retail challenges.