People walk toward a Macy's store in Lewisville, Texas, the United States, on Jan. 9, 2021. (Photo by Dan Tian/Xinhua)
This strategic shift signals Macy's commitment to adapting to the evolving retail landscape.
NEW YORK, Feb. 27 (Xinhua) -- In a move to streamline operations and focus on its core business, U.S. department store chain Macy's on Tuesday announced a strategic plan dubbed "A Bold New Chapter."
The plan, while outlining broader initiatives, notably includes the closure of approximately 150 underperforming stores by 2026. This significant decision aims to allocate resources more effectively, allowing the company to focus on revitalizing and modernizing the remaining 350 locations.
Macy's emphasizes that the closures are crucial for optimizing its store footprint and ensuring long-term growth. The freed-up resources will be directed toward enhancing the shopping experience in the remaining stores, including improvements in product selection, store environments, and customer service.
The company acknowledges the impact of the closures on employees and communities, stating its commitment to supporting affected individuals through severance packages and outplacement services.
Despite the closures, Macy's remains confident in its future. The "A Bold New Chapter" plan also outlines plans to expand its luxury brands, Bloomingdale's and Bluemercury, by up to 45 locations by 2026. Additionally, the company will modernize its operations and monetize up to 750 million U.S. dollars worth of assets through 2026.
"A Bold New Chapter serves as a strong call to action. It challenges the status quo to create a more modern Macy's, Inc. We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value," said Tony Spring, chief executive officer of Macy's, Inc. "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."
People shop at Macy's Herald Square store during Black Friday in New York, the United States, Nov. 26, 2021. (Xinhua/Wang Ying)
This strategic shift signals Macy's commitment to adapting to the evolving retail landscape. While the closures represent a significant change for the company, they are seen as necessary steps toward ensuring long-term success and strengthening its position within the industry.
Macy's unveils a new strategy reflecting changing demographics and shopping habits in the United States. Faced with a shrinking middle class, the retail landscape is increasingly divided: discount stores like Walmart thrive by offering lower prices, while luxury brands cater to those with steady spending power, CNN reported Tuesday.
To adapt, Macy's is pursuing both ends of the spectrum: doubling down on luxury brands like Bloomingdale's and Bluemercury, while downsizing its traditional department stores aimed at the middle class. Additionally, the company plans to open 30 smaller, independent stores outside of malls, capitalizing on the trend of consumers shifting away from traditional shopping centers. These smaller stores boast increased profitability due to lower staffing and inventory requirements, according to the CNN report.
Also on Tuesday, Macy's reported financial results for the fourth fiscal quarter and full fiscal year 2023 ending Feb. 3, 2024, and provided fiscal 2024 guidance. The company reported a net loss of 71 million dollars, compared to 508 million dollars of profits in the same period last year. However, their adjusted earnings per share of 2.45 dollars exceeded analyst expectations of 1.98 dollars.
Total revenue for the quarter ending Feb. 3 reached 8.38 billion dollars, down 2.4 percent year over year but still surpassing forecast of 8.09 billion dollars. While same-store sales declined by 5.4 percent, they fell short of analyst predictions of a 4.7 percent decrease.
Despite these mixed results, Macy's expressed optimism for the current fiscal year, projecting adjusted earnings per share to fall between 2.45 and 2.85 dollars, exceeding the current market consensus of 2.77 dollars. "Over the past several years, we have taken proactive actions to fortify our operations, including strengthening our balance sheet, managing expenses and tightening inventory controls," said Adrian Mitchell, chief operating and chief financial officer of Macy's, Inc. "The dedicated work of our teams delivered a solid close to 2023 and provides a strong foundation for us to execute A Bold New Chapter." ■