"In a number of cases, stores will be closed as the value of the real estate exceeds their value to Macy's as a retail store".
The retailer said on Thursday as it announced its earnings that it would shutter 100 stores, mostly at the beginning of next year.
Macy's announced the future closings on Thursday and said it will identify the approximately 100 of its 728 locations that will close once that list is finalized. On Thursday, the company said it saw a 2.6 per cent drop in comparable sales in the most recent quarter, a weak performance that was nonetheless an improvement over the dismal 6.1 per cent year-over-year decline it recorded in the previous quarter.
But Macy's stock surged in response to its store-closure announcement. "We will continue to carefully analyze consumer shopping patterns and trends, and use data and customer insights as the basis for innovations to drive the business". Macys said that sales staff would be offered positions at nearby locations where possible. The company did not specify how many employees it would need to lay off, but said that it would offer severance to full-time and part-time workers.
Metrick, standing Wednesday evening near Saks' new outdoor cafe that overlooks Manhattan's Rockefeller Center, says there is plenty of hope for department stores that make themselves essential. It added the move "will result in a more appropriate store portfolio for Macy's in the longer term and help us to accelerate our progress in building a vibrant omnichannel brand experience". Macy's will also improve its online search functions and page-loading times, and a build out a simpler ordering process.
The retail chain now has 728 stores. A lifelong resident, she said is concerned about too many retailers closing. Nordstrom breaks down its sales with 2.3 percent same-store sales decline at its full-price department stores and a 5.3 percent gain at its Nordstrom Rack stores. Because you have to sell a certain amount of merchandise to cover your fixed costs so you can break even. He believes the company is doing a fair job integrating the modern online shopping experience with traditional "brick-and-mortar" stores.
Macy's said the upcoming store closings would not affect its Bloomingdale's division. Stifel analyst, Richard Jaffe reaffirmed a Hold rating for Macy's stock and weighed in on the earnings report.
Macy's sales fell almost 4.0 percent during the second quarter, it said on Thursday, but that was better than analysts had expected and helped to send its shares and those of other department stores higher.
This downsizing should lead to better long-term profitability at Macy's, while also freeing up a lot of capital.
Macy's has 10 stores in the Philadelphia area.
The Macy's Herald Square flagship department store is seen here in New York, Aug. 9, 2016. The company also operates the macys.com, bloomingdales.com and bluemercury.com websites.