Suzette Parmley/The Philadelphia Inquirer – As expected, the Macy’s stores at Moorestown and Plymouth Meeting Malls, as well as at Neshaminy Mall in Bensalem and Voorhees Town Center, will be closed this year as part of a major streamlining effort by parent company Macy’s Inc.
All four are expected to close this spring.
A total of 68 Macy’s stores out of 730 across the country will be closed in this round, causing the loss of about 6,200 jobs. Macy’s said the closures are expected to generate about $550 million in cost savings, which are expected to help bolster the firm’s online operations.
The company released the list of closures after the market closed at 4 p.m. Wednesday, underscoring the company’s struggles to match online competition with its portfolio of aging stores. While long awaited, the closures sent Macy’s stock tumbling in after-hours trading Wednesday, falling from $35.83 to about $32 a share.
Last year, 38 Macy’s stores were closed, including the massive one that spanned nearly 100,000 square feet at Suburban Square in Ardmore.
Macy’s acted “to streamline its store portfolio, intensify cost-efficiency efforts and execute its real estate strategy,” a company statement said. These actions are meant to bolster the company’s strategy online, and improve customer experience by driving those customers to shop online.
Pennsylvania Real Estate Investment Trust owns Moorestown and Plymouth Meeting Malls, and Macy’s Inc. owns the stores.
“It’s actually a relief to finally be able to speak about this,” said PREIT CEO Joseph Coradino, minutes after the announcement. “It’s something that we have been working on for some time and we’re looking forward to repopulating these Macy’s stores as they close with exciting new retailers.”
Although no leases to replace these two Macy’s have been signed yet, Coradino said several retailers are in play. He cited another concept similar to Whole Foods taking shape at Plymouth Meeting Mall to replace that Macy’s.
“It really shows what the real true upside can be from getting back what was a department store that was not performing well or being very additive to the mall and what it will become,” Coradino said. “We’re pretty far down the road with re-tenanting these places and have redevelopment plans.”
Another PREIT-owned mall with a Macy’s slated for closure is in Beaver Valley, just outside of Pittsburgh. Coradino said the mall is under agreement of sale.
After Wednesday’s announcement, the only Macy’s stores scheduled to remain open at PREIT malls in the Philadelphia market will be at Cherry Hill, Willow Grove and Exton Square malls. PREIT is 50 percent owner of Springfield Mall with Simon Property Group.
Neshaminy Mall is owned by General Growth Properties, while Voorhees Town Center is owned by Namdar Realty.
Industry experts say that a saturated market, the emergence of digital shopping, a younger shopper that is looking for newer, hipper retailers, and a lack of investment at many of these Macy’s stores led to their demise.
The department store sector has been especially hit hard. Last week, Sears Corp. announced another round of closings in 2017, on top of about 2,000 stores it has closed in the last five years. At least three dozen nationally are on the chopping block.
It had been rumored for months that Macy’s Inc. would close as many as 100 stores after Christmas. Top Philadelphia real estate brokers disclosed last summer that PREIT was actively looking for replacement tenants for the Macy’s at Plymouth Meeting and Moorestown.
“The Macy’s closing will have no effect on me because it’s already a quiet mall,“ said Rene Galvin of Old City, a retailer at Moorestown Mall who sells women’s clothing and jewelry from her store called NeverTooSpoiled on Boutique Row. She said at least three shops near her have closed recently due to a lack of business. “If Boscov’s closes,” she said of another anchor, “they’re done.”
The scenario is playing out across the country at tertiary or mediocre malls that don’t have the retail cache or square footage of a King of Prussia or Cherry Hill Mall.
“The department store industry continues to struggle, given the explosion of online retail,” noted retail consultant Jeff Green, who is based in Phoenix, Ariz. One Macy’s closed in his state last year: in Prescott.
The closures are “really driven by too many Macy’s in the Philadelphia market,” said Coradino. “This was a real opportunity to right-size the Macy’s store count in Philadelphia. This is a win-win for ourselves and for the consumer in the Philadelphia market.”
Macy’s Inc. said it hoped to channel some of the $550 million in cost savings from the closings toward expansion of Macy’s Backstage (off-price outlets within Macy’s stores) and Bluemercury (freestanding and within Macy’s stores), as well as its plans with China’s web shopping operator Alibaba to launch an e-commerce site there.
These savings and earlier efforts in 2016, “exceed the $500 million goal communicated in fall of 2015, one year earlier than expected,” the company said.
Terry J. Lundgren, chairman and CEO of Macy’s Inc., said the company was continuing to work toward boosting online sales by better integrating its remaining brick-and-mortar stores with an online strategy.
“In addition, we have invested in and enlarged our customer data and analytics team, which will help drive our new marketing strategies for 2017,” he said.
Of the 68 closures announced on Wednesday, three had already closed mid-year in 2016, 63 will be closed in early spring 2017, and two will be closed in mid-2017.