Macy’s has announced an increase in store closures for this year, planning to shut down 65 locations, up from the previously expected 50. This decision is part of the retail chain’s broader strategy to close approximately 150 underperforming stores within the next three years. The news was disclosed during the company’s third-quarter earnings call, with CEO Tony Spring indicating that the closures are expected to take place after the holiday season.
The announcement follows a recent incident where an employee concealed $151 million in expenses related to small package deliveries. Macy’s postponed its third-quarter earnings report as it investigated this issue. It was determined that a single employee intentionally made incorrect accounting entries and falsified documents. However, Macy’s Chief Operating Officer Adrian Mitchel clarified that the error did not involve theft, and it did not affect the company’s revenue, cash, or inventory, as all vendors were compensated properly. To enhance its financial integrity, the retailer is implementing stricter financial reporting controls.
The trend of brick-and-mortar store closures is not unique to Macy’s; many department stores are facing similar challenges as foot traffic declines and e-commerce continues to grow. More than 7,100 U.S. retail store closures have been announced through November 2024, marking a 69% increase from the previous year. This year alone, 45 retailers have filed for bankruptcy compared to 25 for all of 2023.
In response to these challenges, Macy’s is channeling its focus towards its other brands, Bloomingdale’s and Bluemercury. The company plans to open 15 new Bloomingdale’s stores and 30 Bluemercury locations in the next three years, alongside remodeling about 30 existing Bluemercury stores. Despite its stock falling approximately 20% over the past year, Macy’s is hopeful that these strategic moves will help turn its fortunes around.
This proactive approach by Macy’s underscores the resilience of the retail industry amid shifting shopping habits. While store closures can seem daunting, they present an opportunity for the company to refine its business model and focus on areas with growth potential. As e-commerce continues to thrive, the investments in Bloomingdale’s and Bluemercury could pave the way for a more sustainable and prosperous future for Macy’s.