Macy’s to close 150 nameplate stores; expand off-mall and luxury formats

Macy’s Inc. unveiled a new strategy that includes a much smaller footprint and a big bet on its luxury and beauty brands. 

The department store giant said it is “focusing resources” by closing approximately 150 underproductive Macy’s locations, including some 50 by the end of 2024, and prioritizing investment in approximately 350 “go-forward” nameplate locations and the continued expansion of small-format stores. In October, Macy’s  said it would open up to 30 small-format, off-mall stores through fall 2025, starting in fall 2024.

As part of its strategy, dubbed "A Bold New Chapter," the company plans to focus more on luxury goods by opening about 15 Bloomingdale’s stores and at least 30 Bluemercury stores during the next three years. It also expects to remodel about 30 Bluemercury locations during that time.  Bloomingdale's and Bluemercury have both outperformed Macy's. 

“A Bold New Chapter serves as a strong call to action," said Tony Spring, who took the reins as CEO from Jeff Gennette at the beginning of February. "It challenges the status quo to create a more modern Macy’s, Inc. We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value."

The stores slated for closure accounted for 25% of the retailer’s overall square footage but just 10% of sales, reported The New York Times, with the company expecting to take in $600 million to $750 million through the sale of the stores and streamlining some of its warehouses.

"We have to focus on having the best stores, not the largest number of stores,” Spring said on a call with analysts, the Times reported.

Macy's did not reveal the locations it plans to close.But Marisa Rodriguez, CEO of the business group Union Square Alliance in San Francisco, told CNBC in a statement that Macy’s plans to close its 400,000-sq.-ft. flagship  in the heart of Union Square. The store, however, will remain open until the company finds a buyer, she said. 

The changes were announced as Macy’s faces a possible proxy fight with activist investor Arkhouse Management Co., which has nominated nine candidates for election to the board of the department store retailer. The nominations followed Arkhouse’s and Brigade Capital Management’s unsolicited bid for the company in December.

In January, Macy’s rejected the $5.8 billion bid, saying the firms failed to address the board’s concerns regarding their ability to finance the proposed transaction and that there was a “lack of compelling value” in the proposal.