Macy's is closing 150 stores as part of a major turnaround effort

CNN
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Macy's is getting a new, smaller, but more luxurious look, designed to turn around the struggling retailer and keep the century-and-a-half-old brand relevant to the fast-changing demands of shoppers.

First, Macy's needs to be scaled down. The company is closing 150 non-performing stores – 50 by the end of 2024 and another 100 over the next few years. By 2026, the company has announced that it will prioritize investing in just 350 Macy's stores.

Second, the company will focus on its successful Bloomingdale's and Bloommercury brands — luxury stores that outperform the Macy's brand. It will open more smaller versions of those stores over the next few years.

It's part of a turnaround effort in what the store calls a “bold new chapter” designed to fend off activist investors and boost the company's ailing stock price and sales.

Macy's and the entire department store industry are affected on all sides. Department stores have been pressured by the rise of Amazon, discount chains like TJ Maxx and the growing strength of online brands.

Macy's stock price is down 75% from a peak of $73 a share in 2015. Since then, it has closed nearly 300 stores — nearly a third of its locations — but still operates about 700 across its brands.

Last month, Macy's announced it About 3.5% of its workforce was laid offOr about 2,350 employees.

The company's struggles have caught the attention of activist investors. Macy declined An unsolicited $6 billion bid from an activist investor to take the iconic department store private last month. The activist group takes another shot at Macy's and begins a proxy fight to take control of the group.

Macy's (M) shares were slightly lower in premarket trading.

New CEO Tony Spring said in a statement that the “bold new chapter,” which has the full support of the company's board, was developed after extensive market research and will reinvigorate the Macy's brand.

Specifically, the new strategy will focus on improving Macy's digital store and narrowing down its offerings.

“A bold new chapter serves as a strong 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 products that shoppers love. Macy's, an upscale brand that has struggled with rising prices over the past few years, said it was focusing on “compulsory value.”

This will lead to steady profit growth over time, predicts Vasant.

The closing of the Macy's locations will mean opening new stores for its luxury brands, the company said.

Macy's said it will open 15 new Bloomingdale's stores and 30 new Bloommercury locations over the next three years. It also plans to remodel 30 existing Bloommercury stores.

As inflation has picked up over the past two years, the retail market has become fragmented: lower-end stores that focus on cost-savings, such as Walmart, have fared better. But luxury brands should be as well, as shoppers have been able to maintain their spending despite higher prices.

This is a developing story and will be updated.