Thursday, March 30, 2023

Macy’s closes 45 stores in first wave of turnaround plan

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Almost a year ago, Macy’s announced an ambitious recovery plan modernize, which included the elimination of about a quarter of its department stores.

Now the retailer has announced the first installment of those closures in a move that is becoming increasingly urgent due to the impact of the pandemic on its business. Macy’s will soon be closing 45 of the 125 stores it announced last February that it would eventually close as part of its “Polaris” plan.

Most of the closed stores are in weak malls from which shoppers have long defected and which have become an albatross for Macy’s. The chain now wants to focus on its best stores in high-caliber ‘A and B malls’, on its e-commerce business, and in the coming years, on new, smaller stores – a format it is testing. currently.

“As previously announced, Macy’s Inc. is committed to resizing our store fleet by concentrating our existing outlets in attractive, well-frequented A and B malls,” said a spokesperson for Macy’s. CNBC first reported the number of stores closed this year.

This move is not surprising given that nearly 40% of Macy’s revenue now comes from its online business and given the expenses related to running the stores in a fiscal year in which the company reported a loss. net loss of $ 4 billion in the first three quarters.

Macy’s online strength – associated with archiving bankruptcy in 2020 JC Penney –reduced the need for such a sprawling fleet, not to mention stores located in struggling malls. Indeed, the retailer, which also owns Bloomingdale’s, has been reducing its fleet for years as chains like TJ Maxx, Ulta Beauty, and Target have eaten in his things. (Macy’s closed 100 stores in 2016.)

Macy’s CEO Jeff Gennette had planned under Polaris to revitalize his store brands and turn four into billion dollar companies, invest in his remaining stores to make them more attractive and, like he said Fortune in November, forge ahead with its new, much smaller Market by Macy’s store format, with locations far from malls.

Like his big store brothers, Nordstrom, JC Penney, and Dillard’s, Macy’s was at a disadvantage last spring by not being viewed as an “essential” retailer by local authorities during the first lockdowns.

But even after most retailers reopened, business continued to flourish in strip centers occupied by Target and Old Navy, while malls struggled. With these trends continuing even after the pandemic is over, Macy’s will not miss the stores it is closing.

Macy’s announced a new Chief Merchant earlier this week, the latest of a number of changes to its C-suite. Over the past 13 months, the retailer has seen its president and brand experience director leave and replaced its financial and digital directors.

More to read absolutely retail cover of Fortune:


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