Macy’s plans to shut 10 department stores in January while delaying other closures
An indoor shopping mall is seen before having to close due to new restrictions by the State of California during the global outbreak of the coronavirus disease (COVID-19) in Carlsbad, California, U.S., July 14, 2020.
Mike Blake | Reuters
Macy’s said Thursday it is reconsidering when it will close the roughly 60 remaining open stores out of a batch of 125 that were on track to go dark by 2023.
However, it said it plans to announce 10 closures in January, and it will provide additional details about those locations in the near future.
“The delayed closure of certain stores allows us to maintain a physical presence in the market, which is critical to our top line growth,” Chief Financial Officer Adrian Mitchell told analysts on an earnings conference call. “Digital performance is stronger in the markets where we have stores.”
Macy’s has been testing off-mall and smaller-format locations, as it closes its larger locations anchored at traditional malls. Mitchell said those openings have brought in strong sales that have exceeded the company’s expectations. He said the department store now sees a “clear path” with off-mall.
The announcement of additional closures comes as Jana Partners has taken a stake in the department store chain’s business. The activist investor is pressuring Macy’s to spin off its e-commerce operations from its stores, hoping to fetch a greater valuation than what Macy’s has today.
Macy’s CEO Jeff Gennette said Thursday that the company is working with the consulting firm AlixPartners to consider all options for its digital operations.
“We also recognize the significant value the market is assigning to pure e-commerce businesses,” Gennette said. “And as we look at the landscape today, we are undertaking additional analysis that could help inform our long term strategy to further unlock value for Macy’s.”
He said the company will share more details on its findings after AlixPartners’ review.
Macy’s shares closed the day up 21.1%, at one point hitting a three-year high of $37.95, after the company beat analysts’ expectations on third-quarter earnings and sales and hiked its full-year outlook.