Department store giant Macy’s said Thursday that it plans to close 100 stores, a dramatic step aimed at helping the chain get ahead of a potentially crippling problem: America has too many stores for the online shopping era.
Macy’s regularly prunes its store portfolio, often closing several dozen underperforming stores after the annual holiday rush. But in dropping a summertime announcement that it will close 15 percent of its 728 locations, the chain appears to be adopting a more aggressive posture than many of its retail industry counterparts and girding its fleet for the reality of a fast-changing shopping environment.
Macy’s has plenty of reasons to make a change: Many of its stores are located in small, regional malls, the kind whose foot traffic has been especially hard-hit by the rise of e-commerce. And the department store category has generally struggled as shoppers increasingly turn to off-price retailers such as T.J. Maxx and fast-fashion players such as H&M to buy clothes.
These factors, along with short-term hitches such as decreased spending by international tourists and unseasonable weather, have left Macy’s in a rough patch that has stretched for more than a year.
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On Thursday, the company said it saw a 2.6 percent drop in comparable sales in the most recent quarter, a weak performance that was nonetheless an improvement over the dismal 6.1 percent year-over-year decline it recorded in the previous quarter. The retailer’s revenue was $5.87 billion, down 3.9 percent from the same period last year.
Macy’s said the store closures would probably cost it about $1 billion in an annual sales. Yet the company’s stock soared 17 percent on Thursday, a sign that investors view the move as a proactive measure that portends a stronger future for Macy’s.