Macy’s, the century-and-a-half-old retail giant, has recently announced its plans to close nearly one-third of its stores as part of a restructuring plan. The move comes as Macy’s aims to revive itself by focusing more on luxury products and better customer service. With 150 underperforming stores set to shut down over the next three years, Macy’s is hoping to streamline its operations and create a more profitable business model.
The downsizing of stores will leave Macy’s with 350 outlets by the end of 2026. However, the company isn’t just closing stores; it also plans to modernize many of its existing locations and expand its presence with new store openings. Approximately 15 Bloomingdale stores and at least 30 new Bluemercury stores are in the pipeline. Additionally, Macy’s plans to open 30 additional small-format stores away from shopping malls through the fall of 2025.
The CEO of Macy’s, Tony Spring, describes the restructuring plan as a return to basics and a focus on balancing the art and science of retail. Spring, who has led Bloomingdale’s for the past nine years, believes that the issues faced by Macy’s are similar to what he encountered at Bloomingdale’s. He emphasizes that the company is raising its threshold for keeping stores open and will only operate those that are cash flow positive.
The decision to close 150 stores represents about 25 percent of Macy’s square footage but only accounts for 10 percent of sales. Retail analyst Dana Telsey believes that this move is prudent given the general shift towards online spending and away from department stores. Macy’s has recognized this trend and aims to adapt its business model accordingly.
Before announcing the store closures, Macy’s had already taken steps to reduce costs by cutting jobs. In January, the company laid off approximately 2,350 employees and closed five stores. The restructuring plan is seen as an opportunity for the company to create value for its shareholders, as Macy’s stock price has been steadily declining over the past nine years.
Macy’s CEO, Tony Spring, expects the restructuring plan to rejuvenate the brand, but cautions that results may not be immediately visible. He predicts that fiscal year 2024 will be a transition and investment year, with consistent sales and profit growth expected from 2025 onward.
The “Bold New Chapter” strategy aims to prioritize the customer by reassessing Macy’s product assortment and offering compelling value. The company plans to simplify and modernize its shopping environment, both in-store and online. Furthermore, Macy’s will focus more on its successful luxury brands, Bloomingdale’s and Bluemercury, and continue expanding its small-format stores.
In addition to these changes, Macy’s plans to overhaul its inventory planning and allocation operations behind the scenes. This move is intended to improve speed and efficiency, ensuring that the right products are available to customers at the right time.
Overall, Macy’s restructuring plan represents a bold attempt to adapt to the changing retail landscape. By closing underperforming stores, modernizing existing locations, and expanding its luxury brands and small-format stores, Macy’s is positioning itself for future success. While the results may take time to materialize, the company is hopeful that this new chapter will create long-awaited value for its shareholders and revitalize the brand.
