45 areas are to be closed as a part of the 3-year plan
The entrance to a Macy’s department store.
Jeffrey Greenberg | Universal Images Group | Getty Images
According to CNBC, Macy’s has told employees at around 45 of its department stores that they will close by the middle of this year.
The closings are part of a previously announced plan by Macy’s to close 125 locations by 2023, which the retailer outlined last February.
“As previously announced, Macy’s is committed to licensing our store fleet by concentrating our existing retail locations in sought-after and busy A and B shopping centers,” a spokeswoman told CNBC in a statement.
“To that end, we announced several store closings today in line with guidelines issued in February 2020,” she said. “These closings bring us closer to achieving the right mix of stores in malls.”
There are about 1,000 malls in the United States today, according to Green Street Advisors, a commercial real estate services company. A vast majority of these malls are classified as what’s called a B, C, and D rated malls, which means they have less revenue per square foot than an A rated mall. For example, an A ++ mall could generate sales of up to $ 1,000 per square foot, while a C + mall could generate around $ 320.
Jeff Gennette, Macy’s chief executive, had previously said the company is still betting on the best malls in the country but is expected to grow outside of the mall in the future.
In November, Macy’s reported a quarterly drop in sales in the same store of more than 20% as consumers cut their clothing and accessories spend in the mall during the Covid pandemic. Digital sales rose 27%, but those gains weren’t enough to make up for losses in stores.
This trend was evident in retail during the holidays. According to Sensormatic Solutions, which is tracking the steps with cameras, customer visits to brick and mortar stores fell 33% year over year during the six-week vacation. This was below Sensormatic’s original forecast that traffic would decrease by 22% to 25%.
Macy’s tried to stay afloat in a turbulent retail environment. More than three dozen retailers, including JC Penney, Neiman Marcus, and Lord & Taylor, filed for bankruptcy protection in 2020 as consumers turned increasingly away from department stores.
CNBC could not immediately retrieve a list of the 45 or so Macy’s locations to be closed. Liquidation sales have already started at some locations, and the rest are scheduled to begin this month.
According to its website, Macy’s operates 544 of its eponymous department stores as well as 34 Bloomingdale locations, 19 Bloomingdale branches and 166 Bluemercury stores.