Macy’s Inc (NYSE:M) kicked off 2018 by announcing nearly a dozen store closures, including seven previously unidentified locations. Net job cuts as a result of these Macy’s store closings at 2018’s state, including the closures and reductions at remaining locations, will come in at around 5,000. The Cincinnati-based department store chain continues to ramp up its cost-saving measures as physical retail continues to get hammered by online sales.
Going forward, Macy’s said it will focus more of its efforts on promoting its most profitable locations and invest more in its online operations as it and other major retailers continue to struggle with steadily declining foot traffic.
Early last year, Macy’s said it would close 100 stores, or about 15% of its locations. More than 80 locations have either closed or are announced to be closed (since 2015, Macy’s has shuttered 124 locations). Macy’s will close another 19 stores, in addition to the 11 announced this week, as their leases expire.
The following Macy’s stores will be closing in early 2018. In most cases, clearance sales will begin on January 8, 2018, and run for two to three months.
Four store closures that were previously announced include:
- Laguna Hills Mall, Laguna Hills, California
- Westside Pavilion, Los Angeles, California
- Stonestown Galleria, San Francisco, California
- Magic Valley Mall, Twin Falls, Idaho
The seven locations Macy’s did not initially identify for closure include:
- Miami (Downtown), Miami, Florida
- The Oaks, Gainesville, Florida
- Novato (Furniture), Novato, California
- Honey Creek Mall, Terre Haute, Indiana
- Birchwood Mall, Fort Gratiot Township, Michigan
- Fountain Place, Cincinnati, Ohio
- Burlington Town Center, Burlington, Vermont
After this round of closures, Macy’s will have fewer than 600 stores, down from around 800 in 2014. A typical location also employs around 100 people. This means that, up until this week, around 700 people who thought they had jobs will now be looking for work in the coming months.
Macy’s Earlier Announcement of Closing About 15% of Stores
In August 2016, Macy’s outlined a series of initiatives designed to drive profitability and enhance shareholder value. As we now know, part of that strategy included closing 100 Macy’s full-line stores (out of a portfolio of 728 stores, including 675 full-line locations).
At the time, it was announced that most of those stores would close in early 2017, with the remaining locations closing as leases expired. Annual net sales at the stores Macy’s was shuttering were estimated at $1.0 billion.
Jeff Gennette, Macy’s current CEO, said at the time that the locations being shut down have been reporting falling profits for years.
“We recognize that these locations do not yield an adequate return on investment and often do not represent a customer shopping experience that reflects our aspirations for the Macy’s brand,” he said.
Macy’s Revenue Declines for 11 Consecutive Quarters
Macy’s drive to improve its bottom line and increase shareholder value cannot have come as a total surprise to investors. Its sales have been shrinking for years, along with its share price.
Most recently, since announcing its turnaround effort in August 2016, Macy’s share price has tumbled 32%. Over the last 12 months, the share price has fallen 28%.
Though the company’s share price has rebounded since it announced its third-quarter results in November 2017, for the third quarter ended October 28, Macy’s announced that total revenue fell 6.1% year-over-year to $5.28 billion. Comparable sales fell 3.6% in the third quarter; this represents the company’s 11th consecutive decline.
The country’s largest department store reported third-quarter earnings per share of $0.12, or $0.23 per share, excluding restructuring and other costs. This compares with $0.05 per share in the third quarter of 2016, or $0.17 per share, excluding other charges.
If there’s any bright spot in Macy’s future, it’s that their outlook for fiscal 2017 didn’t get any worse. In fact, CEO Jeff Gennette predicted continued improvements in their trends in the fourth quarter. To that end, on January 4, 2018, Macy’s announced that comparable sales increased one percent in November and December over the same combined period in 2016.
Gennette went on to say that in 2018, the company is “focused on continuous improvement and will take the necessary steps to move faster, execute more effectively and allocate resources to invest in growth.”
That clearly includes shuttering more stores and announcing additional layoffs.
“Macy’s, Inc. Reports Positive Comp Sales for November/December,” Macy’s Inc, January 4, 2018.
“Macy’s, Inc. Outlines Moves to Drive Profitable Growth and Enhance Shareholder Value,” Macy’s Inc, August 11, 2016.
“Macy’s, Inc. Reports Third Quarter 2017 Earnings Above Prior Year and Re-affirms Full-Year Guidance,” Macy’s Inc, November 9, 2017.