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Macy's, which launched a comprehensive strategy to revive its struggling business, on Wednesday announced that it is accelerating its planned store closures for the year.
CEO Tony Spring told analysts during an earnings call that Macy’s now expects to close about 65 locations this year, up from its previous forecast of 50 announced at the start of the year.
However, Spring added that the "closures will occur post holiday."
The company is still on track with its plans to close 150 locations over three years as part of its strategy dubbed, a "Bold New Chapter," that was announced in February.
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The goal, according to Spring, is to get to a fleet that "can provide sustainable, profitable growth for the enterprise."
CFO Adrian Mitchell reiterated that the company is only closing under performing stores.
A woman shops at Macy’s Herald Square in New York City on Nov. 25, 2022. (Reuters/Brendan McDermid / Reuters Photos)
"These are places where the economics are not as favorable. These are places where customers have shifted away from those centers to shop. And these are stores that are just incredibly difficult to run. So I'll just start with that fundamental premise," Mitchell said.
He continued, saying that "very few of the stores are actually in single-store markets. And the reason that's important is because in an omni-business, we continue to see that when we have a physical presence and a digital presence, by far, we have the best economics."
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The company previously announced it would be down to 350 stores once all the planned closures are implemented. It also said it would simultaneously add approximately 45 Bloomingdale's and Bluemercury locations. Both brands have continued to show growth in sales.
Part of the company's strategy includes revamping 50 key stores, also known as the "First 50," which it aims to use as a model for the next generation of Macy’s locations. Mitchell said the company is already encouraged by the performance of the "First 50" stores. Sales at those stores rose 1.9% during the third quarter.
On Wednesday, Spring said the company plans to open an additional nine new stores and remodel two more stores in the fourth quarter.
People walk past a large Macy’s billboard on a building in front of the Macy’s Herald Square store in New York City on Oct. 8, 2021. (Gary Hershorn/Getty Images / Getty Images)
Activist investor Barington Capital Group said earlier this week that it sees "early promise in the new plan, as it calls for the closure of a significant number of very low productivity Macy’s nameplate locations."
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"We believe this action, coupled with further cost reductions the Company plans to enact, will result in a healthier store base that can begin to deliver consistent revenue growth and profit improvements," Barington Capital Group said.
