BIG UPDATE: Macy’s CEO confirms 55 more locations are on the chopping block and blames closures on underperforming stores
According to The Sun USA, Macy’s is strategically adapting to the challenging retail landscape by revamping its product offerings and refining its operations, which includes the closure of more than 50 additional stores.
CEO Tony Spring detailed the company’s proactive approach during Macy’s second-quarter earnings call, highlighting the steps the retailer is taking to address shifting consumer behaviors and their impact on business performance.
“At Macy’s, which was most affected by these changes in consumer behavior, we realigned our product assortments and adjusted our marketing calendar to strike a better balance between value and fashion,” Spring said during the call.
“We enhanced our promotions and delivered more targeted, personalized messages across different categories and brands. Additionally, we invested in new and proven product areas while scaling back in segments with weaker demand,” he added.
Despite these efforts, Macy’s faced difficulties as the quarter progressed, with consumers becoming more selective amid ongoing financial uncertainty.
While second-quarter sales of $4.9 billion slightly missed expectations, Macy’s adjusted earnings per share (EPS) of $0.53 surpassed forecasts, as noted during the call.
The retailer has been dealing with the fallout of overexpansion and significant shifts in the retail sector, which have made physical stores less central to its business model. The pressure on Macy’s has intensified with competition from giants like Walmart, Target, and Costco, along with the rise of online shopping led by Amazon.
Significant Changes Underway
In response to these challenges, Macy’s is implementing a major restructuring effort. The company plans to close 150 underperforming stores, designating them as “non-go forward” locations, while continuing to invest in its more profitable “go-forward” stores, “beyond the first 50,” as discussed in the call. This strategy aims to streamline operations and focus on more profitable markets.
Chief Financial Officer and Chief Operating Officer Adrian Mitchell provided further insights into the store closure strategy.
The Future Outlook
The key takeaway is that the company is pleased with its progress and the positive feedback from landlords and developers. Despite the current economic environment, the deal pipeline remains robust.
Initially, Macy’s anticipated asset sale gains of between $90 million and $115 million but has since revised that estimate to approximately $115 million. The company achieved $36 million in gains for Q2 and is forecasting $30 million for Q3, leaving a balance of $67 million for Q4.
Overall, Macy’s reports positive trends and strong traction in its strategic efforts.
“The implication is that we’re now planning to close approximately 55 stores, compared to our previous outlook of 50 stores,” said Mitchell. “This is further evidence of the progress we’re making. We’re also very pleased with the value we’ve been able to unlock through these deals and transactions,” he explained.
Macy’s is among many retailers facing store closures, a trend that is impacting consumers across the country. Shoppers are particularly upset after a well-known grocery chain with over 1,000 locations announced the closure of one of its stores. Additionally, customers are both disappointed and frustrated after learning that one of their favorite stores is closing earlier than expected.
