Giant department stores used to be Americans’ go-to retailers; every family had their favorite.
They provided shoppers with the convenience of a one-stop shop, offering a wide selection of brands specializing in everything from home goods to apparel to electronics. This eventually made these retail giants some of the most lucrative companies in the nation, a title that lasted for decades.
However, nothing good lasts forever. The increase in competition, the ever-evolving economy, the shift in consumerism, and the rise of online shopping led to the decline and demise of some of the once-incredibly successful retail giants.
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It’s no surprise that Macy’s has been dealing with multiple blows to its business for years, reporting ongoing sharp net sales declines since the second quarter of 2022, an unfortunate trend that sounds all too familiar to its rival counterparts.
Macy’s announces a restructuring plan
In February, Macy’s (M) announced it would gradually close around 150 underperforming stores across the U.S. by 2026 as part of its restructuring plan, “Bold New Chapter.” For the remaining 350 stores, Macy’s will redirect its attention to its higher-end, more profitable brands. It will also move away from malls and build 30 smaller concept stores for the next two years.
Although most retailers are refocusing their strategies to provide consumers with more value for their money, as shoppers seem to be spending more cautiously and consciously due to economic pressures, Macy’s strategy is the complete opposite.
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Despite the struggling luxury market, Macy’s is putting all its bets on its high-end brands with higher price ranges, as it states they keep customers engaged and attract those willing to spend more. The retailer also claims to see the most positive results from higher full-price sell-throughs, private brand expansion, and sparing promotional discounts.
Macy’s downsizing initiatives don’t just apply to its stores; the retailer has also been laying off employees, announcing it would lay off around 3.5% of its workforce last year.
Macy’s announced it will be closing 66 stores in 2025
Macy’s revealed on Jan. 9 that it will be closing 66 underperforming locations nationwide in 2025 and plans for more closures as it continues implementing its turnaround plan.
“Closing any store is never easy, but as part of our Bold New Chapter strategy, we are closing underproductive Macy’s stores to allow us to focus our resources and prioritize investments in our go–forward stores, where customers are already responding positively to better product offerings and elevated service,” said Macy’s CEO Tony Spring in the announcement.
Activist shareholders Barington Capital Group, L.P. and Thor Equities LLC disagree with Macy’s strategy and have no faith in the effectiveness of its turnaround plan, urging it to consider other restructurings to improve shareholder value. They don’t believe all underperforming locations, specifically the company’s Herald Square flagship in New York City, are being identified to maximize value, claiming Macy’s is sitting on real estate that’s far more valuable than its business.
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Nonetheless, Macy’s has clapped back at those who doubt its plan and stated that the closures of its first 50 stores, which formed part of its “Bold New Chapter” strategy, have already boosted customer satisfaction scores and sales for the last three consecutive quarters, reporting a comparable sales increase of 2.1% in the retailer’s third quarter of fiscal 2024.
However, according to its latest earnings report, Macy’s net sales are still down, decreasing by 2.4% to $4.7 billion, with comparable sales declining by 1.3%.
The list of all 66 closing Macy’s stores can be found here.
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