Despite once being a major part of American social life, malls have been slowly dying over the last few decades—and the retailers who found their success in these shopping centers are also struggling to stay afloat. In the last two years, several popular mall chains including Banana Republic, Bath & Body Works, Dillard's, and Sears have shuttered stores across the U.S. And now, another mall staple is announcing even more closures. Read on to learn why Macy's is closing 150 more stores as shoppers abandon the brand.
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Macy's was already closing stores.
iStockMacy's has been slowly downsizing its retail footprint in recent years. In 2020, the department store announced that it would be shutting 125 of its stores over the following three years as part of its "Polaris transformation strategy." As a Macy's spokesperson previously explained to Best Life, part of this strategy is focused on optimizing the company's store fleet to ensure it has the "right mix of on-mall and off-mall stores."
We saw the plan pan out with continued closures in 2023. But at the beginning of this year, Macy's revealed that it wasn't done. In a memo sent out to employees on Jan. 18, the company confirmed that it would be cutting 2,350 jobs and closing five stores to cut costs, The Wall Street Journal reported.
"Despite our strong and tangible progress over the last few years, we remain under pressure," Jeff Gennette, Macy's now-former CEO, and Tony Spring, Macy's president and CEO-elect at the time, wrote in the memo, per the WSJ.
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The retailer still sees sales falling as shoppers abandon the brand.
iStockA month later, it's clear that the pressures continue for this company. In a Feb. 27 press release, Macy's announced its fourth quarter and full-year 2023 financial results. According to the report, the company's net sales fell nearly 2 percent in the last quarter, leading to a 5.5 percent decline in net sales for the entire 2023 fiscal year.
The downfall was particularly noticeable for the company's namesake brand. Macy's comparable sales had the biggest fall in the fourth quarter, declining 6.0 percent. "The Macy’s nameplate saw strength in beauty, particularly fragrances and prestige cosmetics, and its Backstage off-price business while women’s shoes saw continued softness along with relatively weaker performance in cold-weather apparel and accessories," the company stated in its release.
Macy's is planning to close even more stores as a result.
Ian Dewar Photography / ShutterstockWith the release of its latest financial results, Macy's Inc. also announced a new strategy for the company as it moves ahead. Referred to as "A Bold New Chapter," this plan is "designed to create a more modern Macy's, Inc. that is expected to generate meaningful value for our shareholders in the years ahead," the company stated in its release.
A core section of this new strategy is centered around the closure of 150 more Macy's stores over the next three years. The "underproductive locations" it plans to close will account for 25 percent of the company's overall square footage but just 10 percent of sales, The New York Times reported.
The company is set to close around 50 of these stores during this current fiscal year, and the rest by the end of 2026—leaving just around 350 Macy's stores in the U.S. after this new set of closures.
"We have to focus on having the best stores, not the largest number of stores," Spring, the company's new CEO, said during a call with analysts, per The New York Times.
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But the company is also planning to open some new stores.
iStockMacy's, Inc. owns two high-end chains as well: Bloomingdale's and Bluemercury. While the company is set on reducing the scale of Macy's stores, it is planning to expand the other two chains. This will include about 15 new Bloomingdale's stores and at least 30 new Bluemercury stores over the next three years, CNBC reported. The company is also expected to remodel roughly 30 existing Bluemercury stores during that time.
As Spring explained to CNBC, this is part of the company's plan to take a clear-eyed look at its business—particularly when it comes to its struggling namesake stores.
"Yes, there are headwinds, certainly on discretionary categories and the middle-income consumer, but we take responsibility for what we control,” he said. "Let’s put better products into our stores. Let’s make sure it’s merchandised appropriately at a decent value. And then we have more opportunity for conversion and more [market] share."
Best Life has reached out to Macy's about these new plans, and we will update this story with their response.
