Macy’s to abandon certain malls and move to smaller stores
Macy’s is moving.
The department store chain plans to drop its core position as a primary tenant in some shopping malls and move to smaller stand-alone stores in a bid to regain a foothold amid the coronavirus pandemic.
As the holiday shopping season approaches and struggling malls for business, the company will test several smaller independent Macy’s stores. The redesign includes at least one Bloomingdale store, CNBC reported.
“We continue to believe that the best malls in the country will thrive,” CEO Jeff Gennette told analysts Wednesday, according to CNBC. “However, we also know that Macy’s and Bloomingdale’s have high potential (outside) mall and in smaller formats.”
Department stores such as Macy’s have always been a mainstay of shopping centers as they attract retail traffic to smaller stores, kiosks and food courts, providing much needed financial stability.
But the pandemic has crippled what had been a foolproof business model, as many shoppers bypass malls to shop online. High-end department stores in particular struggled more than other retailers, including Walmart and Target.
Other department stores are struggling to survive or appear ready to throw in the towel.
Neiman Marcus, Stage Stores and others filed for bankruptcy in 2020, and Lord & Taylor announced last week that it was liquidating its remaining 38 stores, according to CNBC. The bankruptcy negotiations at JCPenney have also reportedly encountered a problem.
As for Macy’s, executives said the company is watching its competitors and considering accelerating a plan to close 125 stores over the next three years.
Macy’s had 771 stores in total, including Bloomingdale’s and Bluemercury, in the second quarter that ended in June, CNBC reported.
On Wednesday, the retailer announced that online sales were up 53% from 2019, leading to an increase in overall revenue that surprised Wall Street.
Macy’s shares jumped 8% on Thursday.
The storefront recovery remains weak, however, with sales expected to fall about 20% in the fall, according to CNBC.
Other worrying signs for the company have been looming on the horizon for months.
Macy’s announced in June that it plans to cut 3% of its workforce, including 3,900 corporate jobs, saving it about $ 365 million in fiscal 2020.
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