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Shoppers carry Macy's bags during “Black Friday” in New York on November 24, 2023, the unofficial start of the holiday shopping season.
CNN –
Macy's is getting a new, smaller but more luxurious look to save the struggling retailer and keep the century-and-a-half-old brand relevant to shoppers' rapidly changing demands.
First, Macy's needs to downsize. The company is closing 150 underperforming stores – 50 by the end of 2024 and the other 100 over the next few years. The company announced that the investment will primarily be in just 350 Macy's stores by 2026.
Second, the company will focus on its successful Bloomingdale's and Bluemercury brands – luxury stores that have outperformed the Macy's brand. Additional, smaller versions of these stores will open in the next few years.
It's part of what the business calls a “bold new chapter” turnaround aimed at fending off activist investors and boosting the company's ailing stock price and sales.
Macy's and the entire department store industry have been hit from all sides. Department stores are under pressure from the rise of Amazon, the growing strength of discount chains like TJ Maxx and online brands.
Macy's stock price has fallen 75% from a high of $73 per share in 2015. Since then, the company has closed nearly 300 stores — nearly a third of its locations — but still operates about 700 of its brands.
Last month, Macy's announced it would lay off about 3.5% of its workforce, or about 2,350 employees.
The company's problems have drawn the attention of activist investors. Macy's last month rejected an unsolicited $6 billion offer from an activist investor to take the iconic department store private. The activist group is again trying to attack Macy's by launching a proxy fight to take control of its board.
Macy's (M) shares fell slightly in premarket trading.
New CEO Tony Spring said in a statement that the “bold new chapter,” fully supported by the company's board, was developed after extensive market research and will reinvigorate the Macy's brand.
The new strategy will particularly focus on improving Macy's digital store and streamlining its offering.
“A bold new chapter serves as a powerful call to action,” Spring said in a statement. “It challenges the status quo to create a more modern Macy’s.”
Spring said Macy's will improve the shopping experience for customers by focusing on brands and items that shoppers say they want. And Macy's, a high-end brand that has struggled with soaring prices in recent years, said it would focus on “compelling value.”
That should lead to sustainable earnings growth over time, Spring predicted.
The company said that as Macy's locations close, it will open new stores for its luxury brands.
Macy's said it will open 15 new Bloomingdale's stores and 30 new Bluemercury locations over the next three years. The remodeling of 30 existing Bluemercury branches is also planned.
As inflation has risen sharply in recent years, the retail market has split: lower-end stores focused on cost savings, like Walmart, have done particularly well. But this also applies to luxury brands, as deep-pocketed buyers were able to maintain their spending despite higher prices.
This is a developing story and will be updated.