In pursuit of sales growth, Macy’s announced on Tuesday its decision to close approximately 150 of its namesake stores while simultaneously opening new outlets in strategic locations or those catering to luxury goods. This strategic shift reflects a focus on successful entities within Macy’s portfolio, such as the higher-end Bloomingdale’s department store and the thriving beauty chain Bluemercury. The move comes as Macy’s namesake stores, particularly those in struggling malls, have underperformed in comparison to Bloomingdale’s and Bluemercury, as indicated by the holiday quarter results.
The shift in strategy was shared as part of Macy’s future plans, coinciding with the recent appointment of former Bloomingdale’s CEO Tony Spring as Macy’s CEO on February 4. Macy’s had already announced in January the closure of five namesake stores and the layoff of more than 2,300 employees.
In a CNBC interview, Spring highlighted the company’s initiative to revamp its store footprint by evaluating the profitability and productivity of each location. Macy’s aims to address underproductive and unprofitable stores while also identifying opportunities for expansion in highly productive and profitable markets.
Specifically, Macy’s plans to close about 150 stores, including 50 by early 2025, with a focus on “unproductive” locations. The flagship 400,000-square foot store in San Francisco’s Union Square is among those slated for closure pending a buyer. Macy’s emphasizes its commitment to investing in the approximately 350 namesake stores that will remain open, introducing improvements to customer service and testing smaller store formats in suburban strip malls.
Meanwhile, Bloomingdale’s, outperforming the Macy’s namesake stores, will see growth with the opening of around 15 new stores over the next three years, targeting new markets. The higher-end department store, catering to higher-income and fashion-forward shoppers, has been testing a smaller concept store called Bloomie’s.
Bluemercury, the standout performer among Macy’s brands, is set to expand further, with plans to open at least 30 new stores and remodel approximately 30 existing ones over the next three years. The beauty chain, acquired by Macy’s in 2015 for $210 million, has been testing a new store prototype featuring additional spa services.
In summary, Macy’s strategic adjustments involve closing underperforming namesake stores, expanding successful entities like Bloomingdale’s, and capitalizing on Bluemercury’s positive performance to drive future growth.
