In a bold move that Macy’s said reflects “an advancement in our thinking on the role of stores,” the retailer will shutter 100 of its 728 stores in 2017, or about 14% of its fleet, the company said Thursday.
With the closures, the department store chain is attempting to come to grips with the vastly overstored retail landscape in the age of Amazon, and the urgency to reverse its own poor performance by shedding units plagued by dwindling profits.
Macy’s will shutter 100 of its 728 stores next year. Photographer: David Williams/Bloomberg
The closures are part of an effort to re-create Macy'sM -0.71%physical store presence “as customer shopping preferences and patterns evolve, reallocating investments to highest-growth-potential store and digital businesses,” the retailer said in a statement.
Macy’s makeover includes rolling out new vendor shops, boosting the size and staffing of its My Stylist personal shopping services, and playing up businesses targeted for growth, such as fine jewelry, while adding in new store events and “experiences.”
Macy’s, its upscale sister chain Bloomingdale’s and Bluemercury, the beauty chain it purchased last year, will capitalize on “exceptional digital” sales transactions generated from websites and apps. The department store’s online business has grown at a compounded double-digit rate in each of the past 15 years, the company said.
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Macy’s brick-and-mortar business hasn’t been so lucky. The retailer reported today that second quarter comp-store sales fell 2%. And although analysts’ predicted a steeper decline, the dip marked the retailer’s sixth straight quarterly decline.
The news is the latest in a string of store closings that have been shaking up the retail sector from chains such as Sears, the GapGPS +1.27% and Kohl’s, as stores jockey to resize amid an online shopping market that generated $335 billion in U.S. sales last year, according to Forrester. Even Wal-Mart, the nation’s biggest retailer, is closing a record 126 stores.
But beyond e-commerce siphoning business from brick-and-mortar stores, retail is feeling the effects of shoppers buying fewer tangible things these days, opting instead, to spend more on activities and lived moments like travel, entertainment and a restaurant meal out.
Investors reacted positively in early trading, bidding the stock up 15.1% to $39.14.