Suzette Parmley/The Philadelphia Inquirer – The incredible shrinking Macy’s empire plans to announce the locations of most of its 100 store closures by the end of January.
Elina Kazan, national spokeswoman for Macy’s, said Monday that the majority of the targeted stores to shut will be announced by the end of January 2017, or in about five months.
“For those remaining locations, it will be sometime later – not yet determined when.”
When it announced the 100 closures Aug. 11, Macy’s said it would focus on its e-commerce strategy, as the Gap and JCPenney have done. They, too, are shedding stores as more shoppers migrate online.
At Macy’s, online sales saw 15 percent growth last year, compared with total company sales that fell 3.6 percent.
Also in 2015, the company announced it would close 38 stores nationally, including the Macy’s at Suburban Square in Ardmore. Those closings were phased in from January through March.
When the next round of closures was announced, analysts expected that it would be a month or so after Christmas before the locations would be identified, allowing Macy’s to benefit from holiday traffic and hold closeout, clearance sales.
The Philadelphia area has 10 Macy’s, including the Center City store at 1300 Market St.
“Slim profit margins and falling mall foot traffic” are driving the closures, said Madeline Hurley, an analyst who covers retail at IBISWorld Inc. in New York.
But even now, “fourth-quarter revenues are typically over 40 percent higher than any other quarter during the fiscal year,” she said.
Macy’s is adjusting to a new retail world, where the idea is to have a smaller fleet of stores complemented by a stronger online presence, experts say.
“In the late 1990s and early 2000s, Macy’s began buying up many strong regional department store chains,” said Jeff Green, a Phoenix-based consultant who works closely with department stores on growth. “This resulted in a huge market share for Macy’s. However, the retail environment has changed, and the department store industry is significantly overstored. Macy’s is trying to right-size.”
Bridget Weishaar, senior equity analyst at Morningstar, was also bullish on Macy’s move but predicted more struggles for the department store sector.
“Although comparable sales remained in negative territory during the second quarter, the 2.0 percent decline was a notable improvement from first quarter’s almost 6.0 percent decline,” she wrote to investors this month. “Furthermore, the announcement of intentions to close an additional 100 stores (14 percent of Macy’s store base) reassured investors that Macy’s management remains intent on improving profitability.
“However, we still believe that Macy’s lacks a moat and is in a sector experiencing secular decline. In our opinion, department stores will continue to be forced to compete on price with newer e-commerce entrants and an oversaturated competitive environment.”