Macy's, the famous department store chain, has revealed plans to shut down 150 locations within the next three years. The company's leaders explained that this move aims to revamp their approach to selling and helping the business grow.
Macy's Announces Major Store Closures
Macy's has decided to shut down 150 less profitable stores within the next three years, including 50 by the end of this year. The announcement came on Tuesday, following a report of a loss in the fourth quarter and a drop in sales.
Macy's focuses on enhancing its remaining 350 stores to revitalize its business. This upgrade includes adding more staff to fitting rooms and shoe departments and increasing the presence of visual displays such as mannequins.
Alongside these changes, Macy's is shifting towards a more luxury-oriented approach. The company plans to open 15 new Bloomingdale stores, representing its high-end retail offering, and 30 Bluemercury stores, specializing in luxury cosmetics.
Despite the significant number of store closures, representing 25% of Macy's total square footage, these locations contribute to less than 10% of the company's overall sales, highlighting the strategic move to focus on more profitable and productive areas of its business.
Macy's recently turned down a $5.8 billion buyout proposal from investment company Arkhouse Management and its ally, Brigade Capital Management. This decision comes amid interest from financial circles in Macy's valuable real estate holdings, which are believed to be worth more than their current valuation on the stock market.
This move to close stores and revamp its business strategy was unveiled just weeks after Macy's rejected the takeover bid. The plan aims to present a "positive story" to the market and investors, who are keen for signs of strong direction and growth, explained Neil Saunders, an analyst at GlobalData.
According to Saunders, such a narrative is crucial for boosting investor confidence in the company's future.
Also Read: Final Curtain Call: Sears Offers 70% Off in Farewell Sale at New Jersey Store
Macy's CEO Aims for Growth Amid Closures
Macy's has reported a decline in sales compared to the previous year. However, Tony Spring, who stepped into the CEO role on February 4, believes that closing some stores will help the company grow. "This isn't just about shrinking," Spring said in an interview with The Wall Street Journal. "It's about adjusting our store sizes to meet customer shopping preferences better."
Spring is optimistic about the future, planning to open up to 30 smaller Macy's outlets over the next two years. These changes are part of Macy's ongoing adjustments following an announcement of 125 store closures, resulting in more than 2,000 job losses.
This decision is part of a larger strategy to streamline operations and enhance efficiency.
The announcement of more closures follows recent news that five Macy's stores, including locations in California, Hawaii, Florida, and Virginia, are shutting down.
These stores began liquidation sales in January, which are expected to last eight to twelve weeks. The company also stated earlier that it would reduce management positions to speed up decision-making.
Despite these closures, Macy's is working on making its stores more attractive to shoppers by increasing the number of visual displays. Additionally, the company focuses on expanding its luxury brands, Bloomingdale's and Bluemercury, indicating a strategic pivot towards high-end retail.
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