Macy's Will Close 150 Stores but Expand Bloomingdale's and Bluemercury

Macy's Strategy: Closing Stores, Expanding Bloomingdale's and Bluemercury

Macy's, the largest department store operator in the United States, has announced a major reshaping of its strategy and retail footprint. The company plans to close approximately 150 Macy's stores over the next three years while expanding its upscale chains, Bloomingdale's and Bluemercury [[1]].

The decision to close stores and focus on the expansion of Bloomingdale's and Bluemercury is part of Macy's new chief executive Tony Spring's effort to improve the company's profitability and fend off a potential takeover bid [[1]].

The stores that Macy's plans to close are considered "underproductive locations" that account for 25 percent of the company's overall square footage but only contribute to 10 percent of sales. Macy's expects to generate $600 million to $750 million by selling these stores and streamlining its warehouses [[1]].

The company will notify workers at the stores it plans to close, with approximately 50 stores expected to close this fiscal year and the rest by the end of 2026. The specific locations of the stores have not been identified, but one confirmed closure is the Macy's store in Union Square, San Francisco [[1]].

While Macy's reduces its retail footprint, Bloomingdale's is expected to open 15 new locations, and Bluemercury, the company's beauty chain, will add 30 stores and remodel others. As of November, there were 58 Bloomingdale's and 158 Bluemercury locations [[1]].

Macy's Focus on Better Shopping Experience and Rebranding

Macy's decision to close underperforming stores and expand its luxury chains is driven by a desire to provide customers with a better shopping experience and reposition the company's overall image as a higher-end destination. The goal is to inspire customers through improved content, presentation, and marketing, without necessarily making the stores more expensive places to shop [[1]].

Customer research conducted by Macy's revealed that people wanted a better shopping experience, including improved visual merchandising and more assistance from store workers. The sale of assets from store closures will help fund these improvements, as well as revamping the merchandise assortment and increasing staffing levels in areas like shoes and women's ready-to-wear departments [[1]].

Macy's plans to use data to determine appropriate staffing levels and train workers on how to recommend products to shoppers and provide better assistance in fitting rooms. The company aims to enhance the customer experience by aligning its resources with customer behavior and making decisions faster [[1]].

Challenges and Financial Results

Macy's has faced challenges in winning over the next generation of shoppers and competing in an increasingly e-commerce-oriented world. The company has experienced a sales slump, and its profit margins have been weak, leading to frustration among investors [[1]].

In the fourth quarter, Macy's reported net sales of $8.1 billion, in line with analysts' estimates. Sales at both Macy's and Bloomingdale's were down from the previous year, while Bluemercury saw a 2.3 percent increase in sales, indicating continued consumer interest in beauty and skincare products [[1]].

The restructuring and store closures will result in a $1 billion charge for Macy's. However, the company's shares were up nearly 3.4 percent at the end of the trading day [[1]].

Conclusion

Macy's is implementing a three-year strategy to reshape its retail footprint, closing underperforming Macy's stores while expanding its upscale chains, Bloomingdale's and Bluemercury. The company aims to provide customers with a better shopping experience and reposition its overall image. While facing challenges in the retail industry, Macy's is taking steps to address them and improve its profitability [[1]].