Macy’s will close about a third of its store fleet as its parent focuses on luxury growth in a bid to stave off activist pressures and turn the business around.
The revival plan, which Macy’s Inc. named “A Bold New Chapter,” comes under CEO Tony Spring, who took the helm earlier this month.
It also follows increasing activist investor pressure to get back to growth at Macy’s Inc. The company received an unsolicited offer in December from Arkhouse and Brigade to buy the business and, last week, nine director nominations from Arkhouse. The retailer said it would “evaluate” the nominations, but alleged Arkhouse and Brigade have dodged attempts by Macy’s Inc. to obtain more information on the financing of their proposed acquisition.
“We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments, and compelling value,” Spring said in a statement Tuesday on the revival plan. “Our teams are energized by the work ahead as we accelerate our path to market share gains, sustainable, profitable growth, and value creation for our shareholders.”
Spring, the former Bloomingdale’s CEO, will do that by closing about 150 underperforming Macy’s stores by 2026, leaving the company’s namesake with about 350 stores. The first 50 of those locations will be shuttered by the end of the fiscal year. Macy’s will also continue to grow its smaller-format store concept.
Macy’s declined to provide a list of stores slated for closure or a count on the number of jobs expected to be impacted by the plan.
“Closing a store is never an easy decision,” the company said in a statement sent to SES. “We are committed to supporting our impacted colleagues with opportunities wherever available across Macy’s Inc. and to communicating with transparency.”
As Macy’s contracts, Bloomingdale’s will see around 15 new stores and 30 Bluemercury doors open over the next three years. On the backend, Macy’s Inc. plans to invest in supply chain and fulfillment improvements, along with planning and allocation efficiencies.
The company said those actions will get its free cash flow back to pre-COVID levels and annual adjusted EBITDA up in the mid-single digits starting in 2025.
Macy’s Inc. 2023 Recap
The turnaround plan came the same day Macy’s Inc. reported its fourth-quarter and full-year results ended Feb. 3.
The Macy’s chain ended the quarter with same-store sales down 4.7%, while Bloomingdale’s fell 1.6%. Bluemercury notched a comparable sales gain of 2.3% in the quarter.
Quarterly net sales for the business decreased 1.7% to $8.1 billion, led by a decline in digital as physical stores came in about flat from the year-ago period.
The retailer swung to a fourth-quarter net loss of $71 million, compared to net income of $508 million in the year-ago quarter. Adjusted for impairments related to restructuring measures and other costs, the company’s quarterly net income was $685 million, compared to $524 million in the year ago.
Macy’s Inc. ended 2023 with full-year net sales down 5.5% to $23.1 billion, with declines in both digital and physical stores.
The company’s full-year adjusted net income narrowed from $1.3 billion to $973 million.
Same-store sales for the year were off 6%.
The company’s now looking to the current year as a “transition and investment” period, with net sales in 2024 expected to be between $22.2 billion and $22.9 billion. Earnings per share are projected to be $2.45 to $2.85.
