Macy's to close 125 poor-performing stores; Maine impact unclear
Macy's Inc. (NYSE: M) on Tuesday announced plans to close 125 of its worst-performing department stores over the next three years and cut 2,000 jobs, or 9% of its workforce, as the retail giant seeks to return to solid financial footing.
New York-based Macy's operates around 680 department stores in 43 states, including one at the Maine Mall, as well as branches in the District of Columbia, Guam and Puerto Rico.
Though the company did not disclose locations of the stores to be shuttered, it said the 125 include include 30 that are in the process of being closed now. Together, the 125 account for around $1.4 billion in annual sales.
"We have a clear vision of where Macy's Inc. and our brands ... fit into retail today," Jeff Gennette, the company's chairman and CEO, said in a statement. "We will focus our resources on healthy part of the business, directly address the unhealthy parts of the business and explore new revenue streams."
He added: "We are confident the strategy we are announcing today will allow us to stabilize margin in 2020 and set the foundation for sustainable, profitable growth."
Macy's said it will reduce staff in some stores while staffing up and making upgrades at others, including physical improvements as well as investments in areas from technology to local marketing. The company has already done that at 150 stores it said continue to outperform the balance of the fleet.
Macy's also said it will also consolidate its corporate headquarters in New York and close offices in San Francisco, downtown Cincinnati and Lorain offices in Ohio. It will also close its Tempe, Ariz., customer contact center and consolidate customer service work into its Mason, Ohio, and Clearwater, Fla., facilities.
Macy's shares were up 3.3% in late-morning trading at $17.02, putting its equity value at around $5.6 billion. But the stock has tumbled 29% in the past year.
Plans for South Portland store unclear
Macy's used to have a store at the Bangor Mall but now is only in South Portland, at the Maine Mall
In response to a query from Mainebiz about plans for the South Portland store, Chicago-based Macy's spokeswoman Andrea Schwartz said the retailer did not have anything to add beyond Tuesday's announcement.
Besides Macy's department stores, the New York-based parent company also owns Bloomingdale's and Bluemercury, a luxury beauty retailer founded in 1999.
$1.5 B in expected savings but rough year ahead
Macy's expects the restructuring to yield gross annual cost savings of $600 million in 2020, and $1.5 billion by the end of 2022. It also reported preliminary sales results for the fourth quarter and full-year 2019.
The estimates come ahead of its scheduled earnings report due to be released on Feb. 25, when it may also share further details about its restructuring plans.
It also said it anticipates negative comparable sales in 2020 amid anticipated continued challenges in mall-based retail and disruption from implementation of its new strategy, which it is calling Polaris.
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