CINCINNATI -- Despite notching better-than-expected revenue for 2016's second quarter, Macy's, Inc. announced Thursday it will shutter 100 of its 675 full-line Macy's stores in early 2017.
While still maintaining a significant bricks-and-mortar presence in 49 of the top 50 U.S. markets, Macy’s will operate fewer stores and concentrate its financial resources on better-performing locations, the company wrote in a news release.
The locations of those 100 stores will be announced later this year once Macy's makes the final decisions. The company will communicate its store closing decisions directly with the associates in those locations prior to a public announcement. Macy's said employees displaced by store closings may be offered positions in nearby stores where possible or severance benefits.
“Nearly all of the stores to be closed are cash flow positive today, but their volume and profitability in most cases have been declining steadily in recent 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. We decided to close a larger number of stores proactively so we can invest in a winning customer experience in our most productive and highest-potential locations, as well as invest in growth sooner and more aggressively in digital and mobile,” said Jeff Gennette, Macy’s, Inc. president, who is designated to succeed Terry J. Lundgren as chief executive officer in the first quarter of 2017.
Gennette added that the closure of 100 stores would allow Macy's to "reinvest in a more energized shopping experience in our remaining stores and elevate our total customer experience across all methods of shopping.”
Together, annual sales volume of the approximately 100 closed locations, net of sales expected to be retained in nearby stores and online, is expected to be roughly $1 billion. The reduction in EBITDA is expected to be offset by expense savings beyond those associated with store closings.
Macy’s operates 728 Macy’s stores. From 2010 through 2016, approximately 90 Macy’s stores have been closed and 13 new Macy’s stores have been opened. In addition, six new Macy’s Backstage offprice locations opened in fall 2015.