Macy's will close approximately 100 stores next year as the department store continues to pare back its business in the face of changing shopping patterns and more online competition.
The company announced a series of strategic changes Thursday aimed at setting up the retailer for more sustained growth in the future. The plan includes bringing in more brand shops within the stores, improving online search and ordering, and hosting in-store events to drive traffic.
The 100 store closures are only the latest round of closures Macy's has done in recent years to cast off locations where profitability has waned. Macy's hasn't announced which locations will close. It currently operates 675 full-line stores.
Macy's also announced second quarter results Thursday — sales fell 3.9% to about $5.9 billion, beating analyst expectations for sales of $5.8 billion, according to S&P Global Market Intelligence. The company also beat earnings estimates for 48 cents a share — excluding certain one-time costs, it earned 54 cents a share. Investors were pleased, sending shares surging more than 12% in pre-market trading.
Macy's also continues to look for opportunities to unlock value from its real estate portfolio, particularly at flagship locations in cities, a move it's faced pressure to do for the past year. It's in talks to sell it's men's store in San Francisco, which would likely result in the store closing.
Macy's has been suffering from declining tourist traffic in its more urban stores that rely more heavily on overseas travelers. That trend seemed to level off in the quarter as summer travel encouraged more spending, CEO Terry Lundgren said in a statement.
Macy's has been chasing a significant transformation to try to become more valuable to shoppers who have hundreds of other options to choose from, online or off. And the changes affect everything from the experience on the store floor to who's sitting in the most executive office.
Thursday's report is the first since the company announced the impending departure of CEO Terry Lundgren next year, when current Macy's President Jeff Gennette will take the helm.
