For the Macy’s branded stores, the company plans to invest more in smaller locations. The company has 12 small-format Macy’s stores and has previously said it will open 30 more over the next two years.
Macy’s has not yet publicly identified specific stores to be closed. But the 150 stores generate less than 10 percent of the company’s overall sales even though they represent 25 percent of the company’s gross square footage, CEO Tony Spring said during a call with analysts.
“We have to focus on making sure that we have the best stores, not the largest number of stores,” Spring said.
Executives say the new stores will have new merchandise assortments and better visual presentations. They’re planning to increase staffing in some specific areas, such as women’s shoes and ready-to-wear.
With Bluemercury, Macy’s is betting on one area of discretionary spending that seems to have held up. The beauty sector saw its sales rebound in recent years, with retailers such as Ulta and Sephora continuing to report positive results in 2023.
Overall sales at Macy’s namesake department stores were down 2.5 percent in the fourth quarter of 2023 compared with the same period a year earlier. Bloomingdale’s and Bluemercury did well by comparison, gaining 3.5 percent and 7.8 percent respectively.
Like other retailers, the company has suffered from a “middle-market” pullback among consumers, said Neil Saunders, retail analyst with GlobalData. But the company has also suffered due to its “poor presentation and assortments,” Saunders said, and it has lost market share in core areas of its business, including apparel and home goods.
“It will be a long, hard slog to top and reverse all the rot that has infected the Macy’s brand over many, many years,” Saunders said.
The company posted a $71 million loss in the most recent quarter, driven by restructuring costs. That compares with a $508 million profit during the same quarter a year ago.
Macy’s has been facing a takeover attempt from two investment firms, Arkhouse Management and Brigade Capital Management, which launched a proxy battle to get seats on the Macy’s board after management rejected a $5.8 billion acquisition offer.
Last month, the company announced that it would lay off about 3.5 percent of its workforce, roughly 2,350 employees. The company also hopes to save between $600 million and $750 million by selling assets.
Saunders, the GlobalData analyst, said any turnaround from Macy’s will probably take years to bear fruit. “The job now is to convince investors that the hard journey ahead is worth it,” he said.
Macy’s stock was up 4.5 percent by midmorning.