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 upscale look designed to turn around the troubled retailer and keep the century-and-a-half-old brand relevant to the rapidly changing demands of shoppers.

First, Macy's will have to downsize. The company will close 150 underperforming stores — 50 by the end of 2024 and the other 100 over the next few years. The company announced that by 2026, it will prioritize its investments in just 350 Macy's stores.

Second, the company will focus on its successful brands Bloomingdale's and Bluemercury, luxury department stores that have overtaken the Macy's brand. Smaller and smaller versions of those stores will open over the next several years.

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

Macy's and the entire department store sector have been hit from all sides. Department stores have been under pressure from the rise of Amazon, the growing power of discount chains such as TJ Maxx, and online brands.

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

Last month, Macy's announced this – Laying off about 3.5% of its workforceor approximately 2,350 employees.

The company's difficulties have attracted the attention of activist investors. Messi refused An unsolicited offer of $6 billion From an activist investor to take the iconic store private last month. The activist group is firing back at Macy's, waging a proxy battle for control of the board.

Messi (M) The stock fell slightly in pre-market trading.

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

In particular, the new strategy will focus on improving Macy's digital store and shrinking its offerings.

“This bold new chapter is a powerful call to action,” Spring said in a statement. “It challenges the status quo to create a more modern Macy's store.”

Spring said Macy's will improve the shopping experience for customers by focusing on the brands and items shoppers say they want. Macy's, an upscale brand that has struggled with rising prices over the past few years, said it would focus on “compelling value.”

Spring expects this to lead to sustainable earnings growth over time.

The company said that with the closing of Macy's locations, it will open new stores for its luxury brands.

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

As inflation has risen in the past two years, the retail market has splintered: low-cost stores focused on cost savings, such as Walmart, have performed particularly well. But so did luxury brands, as shoppers with means were able to keep up their spending, despite rising prices.

This is a developing story and will be updated.