Beleaguered retail giant Macy’s is planning to close over 100 of its stores, cut 2,000 jobs and test out a new strategy for future locations.
The Cincinnati-based company intends to shutter 125 of its weakest locations over the next three years, its chief executive told the Wall Street Journal. The closures represent about a fifth of the troubled retailer’s portfolio and include the 30 store closures that were announced in January.
Macy’s also will close some offices and slash about 2,000 corporate jobs — 10 percent of its corporate and support staff, according to the WSJ. Macy’s also is consolidating all of its headquarters to New York.
The news means that about 400 stores will remain in operation. Meanwhile, the 161-year-old chain will test out a new concept: smaller locations in strip centers. It also hopes to reap benefits from its plan to build an office tower on top of its Herald Square location in Manhattan.
The changes — the company is calling the strategy “Polaris” — will yield $480 million in restructuring charges, and the department store anticipates saving $1.5 billion a year through 2022, according to the outlet.
“Our goal is to reclaim and revitalize what a department store should be,” Macy’s CEO Jeff Gennette told the Journal. “Department stores are still vital if they are done right. There is viability to having many categories and brands under one roof.”
Gennette became chief executive of Macy’s in 2017. Since then, he has been working to streamline the company and renovate Macy’s top stores. Macy’s next earnings call is Feb. 25.
The news comes as landlords and retailers work through headwinds stemming from the massive growth of e-commerce, declining foot traffic to malls and a glut of retail real estate.
Amid those retail woes, there are assorted bright spots. On Tuesday, French cosmetics chain Sephora announced it would open 100 new store locations across North America, the largest expansion in the company’s history.
But overall, the industry has gotten battered in recent years. Luxury department store Barneys New York filed for bankruptcy last year, and the bankruptcy of Sears — at one point the largest retailer in the nation — in 2018 led to hundreds of store closures around the country.
And while J.C. Penney has not filed for bankruptcy, the department store also is on many industry experts’ watch lists amid declining sales. [WSJ] — Mary Diduch