Macy's plans to close 100 stores, boost online investment
Macy's said Thursday it plans to close about 100 stores next year and boost its online investments as the nation's largest department store chain tries to become more nimble in an increasingly fierce market.
The closures represent close to 14 percent of Macy's stores.
Macy's that operate around the suburbs include Northbrook, Oak Brook Mall, Bolingbrook, Woodfield Mall in Schaumburg, Stratford Square in Bloomingdale, Hawthorn Center in Vernon Hills and Springhill Mall in West Dundee. Store managers at Springhill and elsewhere declined to comment and referred calls to Macy's spokeswoman Andréa Schwartz.
"We do not have a list of stores as we have not finalized decisions on stores to be closed," said Schwartz. "We are currently in the process of analyzing the situation of each store so we can make these important decisions as intelligently as possible."
The company, which also operates Bloomingdale's stores, said it would increase its exclusive products and prioritize its investments in stores that offer the highest growth potential.
Macy's also reported Thursday that second-quarter profits and sales fell.
Macy's took over the historic Marshall Field name in the Chicago area in 2005 and renamed the stores in 2006, sparking protests from customers outside stores and at shareholder meetings. In November the company announced it was exploring redeveloping its four flagships, including on State Street in Chicago, to find "what else we can do with the underutilized space in the building," Schwartz said at the time.
Macy's had been a stellar performer since the Great Recession, but in the past year and a half, the company has seen slowing sales as it battles competition on all fronts and changing shopping patterns. People are spending more of their money on home improvement as well as experiences like travel or spas. And when they do buy clothing, they're going to T.J. Maxx or fast-fashion chains like H&M. They're also increasingly researching and buying online, and gravitating toward Amazon.com, which is bolstering its store private label fashion brands. Amazon.com is by some forecasts expected to surpass Macy's as the largest online seller of clothing next year.
"The announcements we are making today represent an advancement in our thinking on the role of the stores, the quality of the shopping experience we will deliver, and how and where we reinvest in our business for growth," said Macy's President Jeff Gennette, who will succeed Terry J. Lundgren as CEO in the first quarter of 2017.
Under Lundgren, Macy's has been looking for opportunities to boost sales, including buying upscale beauty brand Bluemercury, launching its own off-price stores called Macy's Backstage and expanding its offerings on exclusive launches including one backed by Sir Elton John and Lady Gaga.
As part of the strategy announced Thursday, most of the stores will close early in 2017. In a number of cases, stores will be closed as the value of the real estate exceeds their value to Macy's as a retail store.
With the store closures, Macy's will have 666 stores including 38 Bloomingdale's locations. That's down about 23 percent from a peak in January 2007 of 868 stores including Bloomingdale's. Annual net sales at the stores Macy's plans to shutter were estimated at about $1 billion.
Macy's said it earned $11 million, or 3 cents per share, in the quarter ended July 30. That compares with $217 million, or 64 cents per share, in the year-ago period. Excluding charges that are related to store closings, the company earned 51 cents, which is above the 48 cent estimate from FactSet.
While Macy's earnings beat Wall Street expectations, it still has a long way to go to see business perk up. Revenue fell 3.9 percent to $5.87 billion. That topped the $5.77 billion estimate from FactSet. Revenue at stores open at least a year, including licensed businesses like beauty, were down 2 percent in the second quarter. Excluding licensed departments, sales were down 2.6 percent. That's the sixth straight decline for that measure.
The company said it was sticking to its outlook. Macy's had said in May that it expects revenue at stores, including business from licensed departments, open at least a year to be down 3 percent to 4 percent. Macy's also said it still expects earnings to be in the range of $3.15 to $3.40 for the year.
•Daily Herald Business Writer Anna Marie Kukec contributed to this report.