New York City — Macy’s, Inc. plans to optimize its portfolio by continuing to grow stores in the best malls, but close approximately 125 stores in lower tier malls within 3 years. The department store also plans to explore new smaller, off-mall formats. Macy’s will also establish a single corporate headquarters and relocate its digital business to New York City.
This updated strategy and 3-year plan is designed to stabilize profitability and position the company for growth.
“We have a clear vision of where Macy’s, Inc. and our brands, Macy’s, Bloomingdale’s and Bluemercury, fit into retail today. We are confident in our strategy, and we have the resources required to return Macy’s, Inc. to sustainable, profitable growth,” says Jeff Gennette, chairman and chief executive officer of Macy’s, Inc. “We will focus our resources on the healthy parts of our business, directly address the unhealthy parts of the business and explore new revenue streams. Over the past 3 years, we have shown we can grow the top-line; however, we have significant work to do to improve the bottom-line. We are confident the strategy we are announcing today will allow us to stabilize margin in 2020 and set the foundation for sustainable, profitable growth.”
The macys.com headquarters will relocate from San Francisco to New York City. This will allow for better coordination and increased collaboration and better access to Macy’s brand partners. The company will also expand its presence in the Atlanta area, which will serve as the primary technology hub for the company. This includes adding positions to its current Johns Creek, Ga., facility, as well as opening an office in Atlanta.
The company completed a store-level assessment of each store’s overall value to the fleet, including predicted profitability based on consumer trends and demographics. As a result, Macy’s plans to close approximately 125 of its least productive stores over the next 3 years, including approximately 30 stores that are in the process of closure now. These approximately 125 stores currently account for approximately $1.4 billion in annual sales. Across the remaining store fleet, the company is adjusting its staffing with reductions in some stores and increases in others.
“Our customers expect convenience and a tailored experience across all channels. We have an opportunity to build a broader yet integrated Macy’s experience within a metropolitan area by investing in our magnet stores, building freestanding Backstage locations and testing new, off-mall store formats,” ssaysid Gennette.
Macy’s will continue to grow the remaining store portfolio, including upgrading an additional 100 stores in 2020. This includes improvements to the physical store, as well as investments in merchandising strategies, technology improvements, talent and local marketing. To date, this treatment has been applied to 150 stores, which account for approximately 50% of 2019 total stores’ sales. These stores continue to outperform the balance of the fleet.
Macy’s, Inc.’s off-price offerings, Backstage and Bloomingdale’s The Outlet, have been a highlight of the company’s performance. Macy’s will continue to expand Macy’s Backstage over the next 3 years. In 2020, the company plans to open an additional 50 Backstage store-within-store locations and 7 additional freestanding, off-mall Backstage stores.
The company is also testing a new store format, Market by Macy’s. This new format is smaller than an average Macy’s store and will be located off-mall in lifestyle centers. Market by Macy’s will feature a mix of curated Macy’s merchandise and local goods, as well as local food and beverage options and a robust community events calendar. The company will open its first Market by Macy’s in Dallas on February 6, 2020.
The company also has made several changes to the senior management team, effective January 31, 2020: John Harper, formerly chief stores officer, has assumed the role of chief operations officer with expanded responsibility for stores, technology, supply chain and brand experience. Marc Mastronardi is now chief stores officer, reporting to Harper. Mastronardi was most recently senior vice president of store operations and customer experience. Danielle Kirgan, chief human resources officer, is taking on an expanded role as chief transformation and human resources officer. She will lead the company’s transformation work.
New York City will become the company’s sole corporate headquarters. The company will be closing its San Francisco, downtown Cincinnati and Lorain, Ohio, offices. The company will also close its Tempe, Ariz., customer contact center and consolidate customer service work into its Mason, Ohio, and Clearwater, Fla., facilities. The company is increasing colleague populations in its Mason, Ohio, location and its Progress Place facility in Springdale, Ohio.
Beginning in 2020, the company expects this strategy to generate annual gross savings of approximately $1.5 billion, which will be fully realized by year-end 2022. For 2020, the company anticipates gross savings of approximately $600 million, some of which will flow to the bottom line in order to stabilize operating margin. The company expects to invest some savings back into the business, with a focus on growth, Backstage, off-mall expansion and continued improvements to the digital business, as well as technology investment focused on analytics and automation that will drive further productivity improvements.
Macy’s, Inc. is one of the nation’s premier retailers. The company comprises three powerful retail brands: Macy’s, Bloomingdale’s and Bluemercury. Macy’s, Inc. is headquartered in New York City. For more information, visit www.macysinc.com.
SOURCE: Macy’s, Inc.