Department store chain Macy’s announced plans Tuesday to close 150 stores, and add more locations for luxury retailer Bloomingdale’s and beauty story chain Bluemercury.
The company said the moves are meant to modernize its portfolio of retail locations and improve sales.
“We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value,” Macy’s Inc. CEO Tony Spring said in a release from the company.
The 150 underperforming stores represent about 31% of all Macy’s locations. The company plans to complete 50 of those closures by the end of this year.
The affected stores take up 25% of the company’s overall square footage, but provide only 10% of its sales. Macy’s expects to make $600 million to $750 million by selling the buildings and streamlining some of its warehouses, Mr. Spring said on a Tuesday fourth-quarter earnings call with investors, as transcribed by business news website Seeking Alpha.
“Our thresholds to keep our stores open have become more stringent. In the past, we may have continued operating an underproductive store that was … cash flow positive. The bar has now been raised,” Mr. Spring said.
There are currently 481 Macy’s stores, 12 “small-format” Macy’s stores, 33 Bloomingdale’s stores, 21 Bloomingdale’s outlet stores and 159 Bluemercury stores. Macy’s announced in January that it was laying off about 3.5% of its workforce, or roughly 2,350 employees.
The upscale Bloomingdale’s and Bluemercury chains have outperformed the rest of the company’s portfolio and the broader luxury consumer market, the company said.
Around 15 new Bloomingdale’s will be built, 30 new Bluemercury stores will be built and 30 more will be remodeled over the next three years.