MACY’S will close 36 of its 770 stores following “disappointing” sales and earnings last year and weak holiday sales, as part of its plan to shut down 40 locations across the country.
The move is part of its plan to shut down 40 locations across the country as part of a restructuring plan to address the company’s slumping sales. It is expected to save the company approximately $400 million worth of expenses. Four stores have already been closed.
“We are making adjustments to become more efficient and productive in our operations,” Terry Lundgren, chairman and chief executive at Macy’s Inc., said in a statement. “Moreover, we believe we can operate more effectively with an organization that is flatter and more agile so we can pursue growth and regain market share.”
The department store chain announced its plan last year, with Lundgren citing that consumers are increasingly shopping online.
This year, Lundgren said Macy’s struggled due to unseasonably warm weather and lower spending among international tourists.
The 40 stores set to be closed are deemed underperforming of the company. Three of the locations shutting down are in California. The remaining 36 will be closed in early spring and were set to launch final eight- to 12-week clearance sales starting Monday, Jan. 11, the Los Angeles Times reported.
The move will also cut more than 4,500 jobs, the company announced Wednesday, Jan. 6. About 3,000 associates will be affected, but Macy’s said approximately half are anticipated to be placed in other positions, USA Today reported.
“In some cases, there will be short-term pain as we tighten our belt and realign our resources,” Lundgren said in a statement. “But our eye is on a long-term vision of Macy’s Inc. as a dynamic retailer that serves existing customers and acquires new ones through innovative approaches.”
Store shutdowns are also expected to negatively impact malls. At least a dozen of Macy’s locations closing down are located in malls that are already struggling with dwindling sales and store closures, according to CNN.
“The department store business, it’s the worst segment in retailing,” Howard Davidowitz, chairman of retail consulting and investment firm Davidowitz & Associates, CNN reported. “It’s the highest cost operator, they’re not growing, and they’re in a world where the customer is looking for a great deal.”
