Macy’s, Inc. (NYSE:M) today announced a series of actions to
streamline its store portfolio, intensify cost efficiency efforts
and execute its real estate strategy. These actions bolster the
company’s strategy to further invest in omnichannel capabilities,
improve customer experience and create shareholder value. The
actions include:
- The closure of 68 stores and the
reorganization of the field structure that supports the remaining
stores, reinforcing the strategy of fewer stores with better
customer experience. These store closures are part of the
approximately 100 closings announced in August 2016.
- The significant restructuring of the
Macy’s, Inc. operations to focus resources on strategic priorities,
improve organizational agility and reduce expense.
- The sale of properties consistent with
the previously announced real estate strategy.
The actions announced today are estimated to generate annual
expense savings of approximately $550 million, beginning in
2017, enabling the company to invest an additional $250 million in
growing the digital business, store-related growth strategies,
Bluemercury, Macy’s Backstage and China. These savings, combined
with savings from initiatives implemented in early 2016, exceed the
$500 million goal communicated in fall of 2015, one year earlier
than expected.
“Over the past year, we have been focused and disciplined about
making strategic decisions to position us to gain market share and
return to growth over time. While we are pleased with the strong
performance of our highly developed online business, as well as the
progress we have made on selling and visual presentation programs
and expense reduction initiatives in 2016, we continue to
experience declining traffic in our stores where the majority of
our business is still transacted. Given the overall trends
challenging us and the broader retail industry, and the time needed
to execute new strategies, we expect our 2017 change in comparable
sales to be relatively consistent with our November/December sales
trend,” said Terry J. Lundgren, chairman and chief executive
officer of Macy’s, Inc. “Our omnichannel strategies continue to
evolve based on the changes in our customers' shopping behaviors,
including a focus on buy online, pickup in store and mobile-enabled
shopping. In addition, we have invested in and enlarged our
customer data and analytics team, which will help drive our new
marketing strategies for 2017. Whether it is improving corporate
agility, enhancing our customer engagement strategies, or
continuing to capitalize on the potential value of our real estate
assets, we remain focused on the actions that will ultimately
improve our financial results and provide the greatest return for
our shareholders.”
In conjunction with today’s announcement,
approximately $250 million of charges or 50 cents per
share (of which approximately $210 million is expected to
be cash) are expected to be recorded in the fourth quarter of 2016.
These charges were not previously included in earnings guidance
provided by the company and are in addition to the $249
million recorded in the second quarter as an estimate of asset
impairment and other charges primarily related to 2016 store
closings.
(Editor’s Note: Macy’s, Inc. this afternoon also issued a
separate news release announcing sales results for the
November/December 2016 period and updating guidance.)
Store Portfolio Restructure
The company today announced 68 Macy’s store closings (out of a
current total of 730 Macy’s stores). Of the 68, three closed
mid-year, 63 will be closed in early spring 2017 and two will be
closed in mid-2017. Three other locations were sold, or are to be
sold, and are being leased back. (A list of planned store closings,
as well as store openings, is included at the end of this news
release.) The company intends to opportunistically close
approximately 30 additional stores over the next few years as
leases or operating covenants expire or sale transactions are
completed.
As a result of closing 63 Macy’s stores in early 2017, along
with the three closed mid-year 2016, the company’s 2017 sales are
expected to be negatively impacted by approximately $575
million. This reflects the company’s ability to retain sales at
nearby stores and on macys.com through targeted marketing and
merchandising efforts.
Associates displaced by store closings may be offered positions
in nearby stores where possible. Eligible full-time and part-time
associates who are affected by the store closings will be offered
severance benefits. The company estimates that 3,900 associates
will be displaced as a result of these closures.
“As we’ve noted, it is essential that we maintain a healthy
portfolio of the right stores in the right places. Our plan to
close approximately 100 stores over the next few years is an
important part of our strategy to help us right-size our physical
footprint as we expand our digital reach. We are closing locations
that are unproductive or are no longer robust shopping destinations
due to changes in the local retail shopping landscape, as well as
monetizing locations with highly valued real estate,” Lundgren
said. “These are never easy decisions, and we are committed to
treating associates affected by these closings with respect and
transparency.”
Four new Macy’s and Bloomingdale’s stores are currently planned
and/or under construction, as previously announced. In addition,
new Macy’s and Bloomingdale’s stores are planned to open in Abu
Dhabi, and one Bloomingdale’s store is planned to open in Kuwait,
all under license agreements with Al Tayer Group. The company also
plans to continue its expansion of Macy’s Backstage (within Macy’s
stores) and Bluemercury (freestanding and within Macy’s
stores).
Efficiency and Expense Reduction Initiatives
To address the need for greater efficiency and productivity,
Macy’s, Inc. will implement the following changes in early
2017:
- Restructuring its central organization
with a focus on eliminating layers of management to reduce costs
while improving decision making and agility.
- Intensifying efforts to reduce
non-payroll costs companywide by achieving lower pricing and
reducing consumption to deliver sustainable savings.
- Making changes to the way stores are
operated and reducing field infrastructure given the reduced store
sales and evolving customer behavior.
The company estimates that these actions will result in a
headcount reduction of approximately 6,200.
Real Estate
The company continues to drive shareholder value through ongoing
real estate initiatives. As previously communicated, the three
prongs of the real estate strategy are: flagship assets, closure of
approximately 100 stores and creating value from the remaining real
estate portfolio. Since the end of the third quarter, Macy’s, Inc.
has completed the following transactions that, in total, resulted
in the receipt of approximately $95 million of cash proceeds and
gain recognition of approximately $56 million:
- Sale of the Stonestown store in San
Francisco, CA, to General Growth Properties (GGP). Macy’s, Inc.
will lease this store back from GGP as that company develops plans
for this location.
- Sale of the downtown Portland, OR,
store (announced in the third quarter release).
In addition, the company has signed an agreement to sell the
downtown Minneapolis store to the 601W Companies, whose intention
is to redevelop the building into creative office space on the
upper floors and to pursue retail opportunities on the street and
skywalk levels. This transaction is expected to close by fiscal
year end.
About Macy’s, Inc.
Macy’s, Inc., with corporate offices in Cincinnati and New York,
is one of the nation’s premier retailers, with fiscal 2015 sales of
$27.079 billion. The company operates about 880 stores in 45
states, the District of Columbia, Guam and Puerto Rico under the
names of Macy’s, Bloomingdale’s, Bloomingdale’s Outlet, Macy’s
Backstage and Bluemercury, as well as the macys.com,
bloomingdales.com and bluemercury.com websites. Bloomingdale’s in
Dubai is operated by Al Tayer Group LLC under a license
agreement.
All statements in this press release that are not statements of
historical fact are forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Such
statements are based upon the current beliefs and expectations of
Macy’s management and are subject to significant risks and
uncertainties. Actual results could differ materially from those
expressed in or implied by the forward-looking statements contained
in this release because of a variety of factors, including
conditions to, or changes in the timing of, proposed real estate
and other transactions, prevailing interest rates and non-recurring
charges, store closings, competitive pressures from specialty
stores, general merchandise stores, off-price and discount stores,
manufacturers’ outlets, the Internet, mail-order catalogs and
television shopping and general consumer spending levels, including
the impact of the availability and level of consumer debt, the
effect of weather and other factors identified in documents filed
by the company with the Securities and Exchange Commission.
(NOTE: Additional information on Macy’s, Inc., including past
news releases, is available
at www.macysinc.com/pressroom).
Macy’s Store Closings
Already Completed 2016 Closings
- Laurel Plaza, North Hollywood, CA
(475,000 square feet; opened in 1995; 105 associates);
- Ala Moana Jewel Gallery, Honolulu, HI
(2,000 square feet; opened in 1986; 9 associates);
- Valley Fair, West Valley City, UT
(106,000 square feet; opened in 1970; 53 associates);
Already Announced Year-End 2016 Closings
Final clearance sales at the following Macy’s stores closing in
early 2017 will begin on Monday, January 9, and run for
approximately eight to 12 weeks (with the exception of Lancaster
Mall*, where final clearance sales are already in progress):
- Greenwood, Bowling Green, KY (124,000
square feet; opened in 1980; 63 associates);
- Carolina Place, Pineville, NC (151,000
square feet; opened in 1993; 69 associates);
- Douglaston, Douglaston, NY (158,000
square feet; opened in 1981; 144 associates);
- Downtown Portland, Portland, OR
(246,000 square feet; opened in 2007; 85 associates);
- *Lancaster Mall, Salem, OR (67,000
square feet; opened in 1980; 53 associates);
- Oakwood Mall, Eau Claire, WI (104,000
square feet; opened in 1991; 55 associates)
Year-End Closings
- Mission Valley Apparel, San Diego, CA
(385,000 square feet; opened in 1961; 140 associates);
- Paseo Nuevo, Santa Barbara, CA (141,000
square feet; opened in 1990; 77 associates);
- Lakeland Square, Lakeland, FL (101,000
square feet; opened in 1995; 68 associates);
- Oviedo Marketplace, Oviedo, FL (195,000
square feet; opened in 2000; 83 associates);
- Sarasota Square, Sarasota, FL (143,000
square feet; opened in 1977; 86 associates);
- University Square, Tampa, FL (140,000
square feet; opened in 1974; 73 associates);
- CityPlace, West Palm Beach, FL (108,000
square feet; opened in 2000; 72 associates);
- Georgia Square, Athens, GA (121,000
square feet; opened in 1981; 69 associates);
- Nampa Gateway Center, Nampa, ID
(104,000, square feet; opened in 2009; 57 associates);
- Alton Square, Alton, IL (180,000 square
feet; opened in 1978; 54 associates);
- Stratford Square, Bloomingdale, IL
(149,000 square feet; opened in 1981; 87 associates);
- Eastland, Bloomington, IL (154,000
square feet; opened in 1999; 55 associates);
- Jefferson, Louisville, KY (157,000
square feet; opened in 1979; 52 associates);
- Esplanade, Kenner, LA (188,000 square
feet; opened in 2008; 101 associates);
- Bangor, Bangor, ME (143,000 square
feet; opened in 1998; 65 associates);
- Westgate, Brockton, MA (144,000 square
feet; opened in 2003; 79 associates);
- Silver City Galleria, Taunton, MA
(152,000 square feet; opened in 1992; 82 associates);
- Lakeview Square Mall, Battle Creek, MI
(102,000 square feet: opened 1983; 51 associates);
- Eastland Center, Harper Woods, MI
(433,000 square feet; opened in 1957; 121 associates);
- Lansing, Lansing, MI (103,000 square
feet; opened in 1979; 57 associates);
- Westland, Westland, MI (334,000 square
feet; opened in 1965; 106 associates);
- Minneapolis Downtown, Minneapolis, MN
(1,276,000 square feet; opened in 1902; 280 associates);
- Northgate, Durham, NC (187,000 square
feet; opened in 1994; 72 associates);
- Columbia, Grand Forks, ND (99,000
square feet; opened in 1978; 53 associates);
- Moorestown, Moorestown, NJ (200,000
square feet; opened in 1999; 107 associates);
- Voorhees Town Center, Voorhees, NJ
(224,000 square feet; opened in 1970; 77 associates);
- Preakness, Wayne, NJ (81,000 square
feet; opened in 1963; 72 associates);
- Cottonwood, Albuquerque, NM (173,000
square feet; opened in 1996; 56 associates);
- Las Vegas Boulevard, Las Vegas, NV
(178,000 square feet; opened in 1966; 84 associates);
- Great Northern, Clay, NY (88,000 square
feet; opened in 1989; 55 associates);
- Oakdale Mall, Johnson City, NY (140,000
square feet; opened in 2000; 58 associates);
- The Marketplace, Rochester, NY (149,000
square feet; opened in 1982; 77 associates);
- Eastland, Columbus, OH (121,000 square
feet; opened in 2006; 73 associates);
- Sandusky, Sandusky, OH (133,000 square
feet; opened in 1979; 61 associates);
- Fort Steuben, Steubenville, OH (132,000
square feet; opened in 1974; 59 associates);
- Promenade, Tulsa, OK (180,000 square
feet; opened in 1996; 58 associates);
- Neshaminy, Bensalem, PA (211,000 square
feet; opened in 1968; 89 associates);
- Shenango Valley, Hermitage, PA (106,000
square feet; opened in 1976; 69 associates);
- Beaver Valley, Monaca, PA (203,000
square feet; opened in 1987; 78 associates);
- Lycoming, Muncy, PA (120,000 square
feet; opened in 1995; 61 associates);
- Plymouth Meeting, Plymouth Meeting, PA
(214,000 square feet; opened in 1966; 74 associates);
- Washington Crown Center, Washington, PA
(148,000 square feet; opened in 1999; 67 associates);
- Parkdale, Beaumont, TX (171,000 square
feet; opened in 2002; 67 associates);
- Southwest Center, Dallas, TX (148,000
square feet; opened in 1975; 68 associates);
- Sunland Park, El Paso, TX (105,000
square feet; opened in 2004; 71 associates);
- Greenspoint, Houston, TX (314,000
square feet; opened in 1976; 70 associates);
- West Oaks Mall, Houston, TX (244,000
square feet; opened in 1982; 135 associates);
- Pasadena Town Square, Pasadena, TX
(209,000 square feet; opened in 1962; 78 associates);
- Collin Creek, Plano, TX (199,000 square
feet; opened in 1980; 103 associates);
- Broadway Square, Tyler, TX (100,000
square feet; opened in 1981; 65 associates);
- Layton Hills, Layton, UT (162,000
square feet; opened in 1980; 72 associates);
- Cottonwood, Salt Lake City, UT (200,000
square feet; opened in 1962; 88 associates);
- Landmark, Alexandria, VA (201,000
square feet; opened in 1965; 119 associates);
- River Ridge, Lynchburg, VA (144,000
square feet; opened in 1980; 60 associates);
- Everett, Everett, WA (133,000 square
feet; opened in 1977; 109 associates);
- Three Rivers, Kelso, WA (51,000 square
feet; opened in 1987; 57 associates);
- Valley View, La Crosse, WI (101,000
square feet; opened in 1980; 57 associates)
Other 2017 Closings
- Simi Valley Town Center
(men’s/home/kids), Simi Valley, CA (190,000 square feet; opened in
2006; 105 associates);
- Mall at Tuttle Crossing
(furniture/home/kids/men's), Dublin, OH (227,000 square feet;
opened in 2003; 52 associates)
Stores Sold (or to be Sold) and Leased Back
These stores have been or will be sold, and Macy's will continue
to operate them on leases from the owners:
- Stonestown Galleria, San Francisco, CA
(280,000 square feet; opened in 1952; 204 associates);
- Union Square Men’s, San Francisco, CA
(248,000 square feet; opened in 1974; 256 associates; as previously
announced);
- Tyson’s Galleria, McLean, VA (265,000
square feet; opened in 1988; 122 associates; as previously
announced)
(The number of associates given by store reflects the number of
positions eliminated. Many of these associates will be placed in
other positions.)
Store Openings
Four new Macy’s and Bloomingdale’s stores are currently planned
and/or under construction, as previously announced.
New Macy’s stores will be opening in:
- Westfield Century City, Los Angeles, CA
(a 155,000 square-foot store to open in spring 2017; Macy’s
previously operated a 136,000 square-foot store in this location
which closed in January 2016);
- Fashion Place, Murray, UT (160,000
square feet; to open in spring 2017; approximately 150
associates)
New Bloomingdale’s stores will be opening in:
- Westfield Valley Fair Shopping Center,
San Jose, CA (150,000 square feet; to open in spring 2019;
approximately 250 associates);
- The SoNo Collection, Norwalk, CT
(150,000 square feet; to open in fall 2019; approximately 200
associates)
In addition, in the next two years, the company plans to open
approximately 50 additional Macy’s Backstage off-price locations
(all of which will be inside existing Macy’s stores) and about 50
Bluemercury beauty specialty stores (freestanding and shops inside
existing Macy's stores).
Internationally, under license agreements with Al Tayer Group, a
new Bloomingdale’s store is planned to open in 360 Mall in Al
Zahra, Kuwait in Spring 2017 and new Macy’s and Bloomingdale’s
stores are planned to open in Al Maryah Central in Abu Dhabi,
United Arab Emirates, in 2018.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170104006347/en/
Macy’s, Inc.Media – Holly Thomas,
646-429-5250holly.thomas@macys.comorInvestor – Matt Stautberg,
513-579-7780
Macys (NYSE:M)
Historical Stock Chart
From Aug 2024 to Sep 2024
Macys (NYSE:M)
Historical Stock Chart
From Sep 2023 to Sep 2024