Macy’s Shifts to ‘A Bold New Chapter’

On Tuesday, Macy’s announced a new turnaround plan, “A Bold New Chapter,” that calls for the closing of about 30% of its traditional department stores, the opening of smaller versions of its namesake chain, and adding more Bloomingdale’s and Bluemercury locations.

“This isn’t just about shrinking,” Macy’s new CEO Tony Spring told The Wall Street Journal. “This is about resizing the portfolio to make sure we are giving people an opportunity to shop the way they want.”

A total of 150 full-line Macy’s locations will close over the next three years. The stores set to close represent about a quarter of gross square footage in 2023 but less than 10% of sales. The remaining 350 Macy’s locations outperformed non-go-forward locations by 500 basis points in comparable-store sales and by 950 basis points in four-wall adjusted EBITDA rate, Spring noted in the company’s Q4 2023 earnings call.

Macy’s has already closed about 350 department stores over the last decade amid struggles against big-box discounters, fast-fashion chains, and online competitors. Niche specialty chains inside the mall have also done a better job over the years, reaching younger consumers.

Macy’s continuing department stores will undergo upgrades, including elevated yet streamlined merchandising offerings, enhanced visuals, and additional staffing in areas like women’s shoes and ready-to-wear. Macy’s hopes to save $600 million to $750 million from the sales of assets through 2026, mostly by selling off stores, outparcels such as parking lots, as well as some logistic centers, according to Women’s Wear Daily.

As previously reported, 30 small-format, off-mall Macy’s locations are still set to open over the next two years that enable the retailer to target high-traffic shopping centers. Currently, Macy’s has 12 smaller-format stores.

Other plans for the Macy’s banner include an ongoing overhauling of its private label assortments, rationalizing and monetizing the supply chain, and better positioning the digital experience around “inspiration,” according to Spring.

Macy’s also plans to open as many as 15 new Bloomingdale’s locations and at least 30 Bluemercury stores over the next three years to increase its luxury presence. It will also remodel around 30 existing Bluemercury locations. As of October, there were 58 Bloomingdale’s stores and 158 Bluemercury locations. Both banners have been outperforming the core department store business.

Meanwhile, Macy’s is under attack from activist investors who have offered to buy the company for $5.8 billion. In January, it eliminated 13% of its corporate staff and said it would close five stores.

The new plan by Spring, who formerly led Bloomingdale’s, accelerates many efforts by former CEO Jeff Gennette, including department store closings and increased emphasis on small-format locations and luxury. Spring told analysts, “We will test and learn and not bite off more than we can chew.”