Macy’s has been feeling the impact of several internal and macroeconomic factors in recent quarters, including the ports slowdown, FX pressure, declining tourism and restrained consumer demand for some its merchandise offerings. But the Cincinnati-based retailer said the store closures are a move to help optimize its omnichannel approach to customers.
“Physical stores remain absolutely vital to our omnichannel strategy, which provides local touchpoints and tailored merchandise assortments for shoppers in nearly every major market,” said Terry Lundgren, chairman and CEO of Macy’s, in a release. “As new shopping centers are opened, however, many customers change their shopping habits and often the sales volume of a store gets divided among the new and nearby, existing centers. Each year, we prune some stores that are our weakest performers so that we can concentrate our resources on the best locations and maintain a strong physical presence. At the same time, we open a small number of new stores to fill gaps in our market coverage or where we have outstanding real estate opportunities.”
The 35-40 planned closures represent an accelerated number of closings compared to the trend at the company over the past five years. Macy’s currently operates 770 Macy’s stores and between 2010 and 2015, the company closed 52 Macy’s doors—also adding 12 new Macy’s stores during the period.
“Macy’s stores today are places to shop, relax and be entertained – much like they have for generations. Moreover, all Macy’s stores today can fulfill merchandise orders direct to consumers’ homes, serve as convenient locations for customer pick up of merchandise bought online, and are the origination point for same-day delivery in 17 local markets,” Lundgren said. “While making the decision to close stores is difficult, we know it is necessary for us to remain competitive as customer shopping patterns continue to change.”
The company said it will add six new Macy’s Backstage offprice locations, opening in fall 2015.
The locations of the 35 to 40 stores to be closed in early 2016 will be announced at a later date. The stores’ annual sales volume, net of sales expected to be retained in nearby stores and online, is expected to be roughly $300 million, the company said.
Associates displaced by store closings may be offered positions in nearby stores where possible while eligible full-time and part-time associates who are laid off due to the store closing will be offered severance benefits, Macy’s said in a statement.