TSL Express Daily News

Macy’s Inc. said it plans to close 150 unproductive locations as the department-store chain seeks to fight off a pair of activist firms seeking to buy the company. 

The company didn’t give an estimate of the number of employees that will be impacted by the closures, which represent almost a third of the company’s US Macy’s stores and will happen over the next three years. Many of the stores are near other Macy’s locations, which could allow some to transfer. Macy’s also plans to add 15 new Bloomingdale’s and 30 Bluemercury locations by 2026 — an effort to accelerate growth of its higher-end brands. 

The announcement, accompanied with fourth-quarter results, follow a $5.8 billion buyout offer from Arkhouse Management and Brigade Capital Management in December. Macy’s rejected the offer, but last week Arkhouse nominated nine directors to Macy’s board as the activist investor persists in its efforts. 

The new real estate strategy, which comes less than a month into the tenure of Chief Executive Officer Tony Spring, is expected to free up between $600 million and $750 million of assets through 2026, the company said.

Fourth-quarter earnings per share of $2.45, excluding some items, beat the average analyst estimate and improved from a year ago. For the full year, Macy’s anticipates adjusted earnings per share will be in a range of $2.45 and $2.85, below the average analyst estimate of $3 a share and weaker than last year. The company’s net sales outlook was also below the average analyst estimate. Macy’s described 2024 as a year of “transition and investment.”

Same-store sales at the Macy’s namesake brand fell 6% on an owned basis in the fourth quarter, while sales at the higher-end Bloomingdale’s fell 1.5%. Bluemercury, which sells beauty and skin-care products, rose 2.3%. While sales across the company were down from a year earlier, Macy’s beauty and off-price categories performed well during the holiday season. 

Macy’s, like many mall-based retailers, has struggled with a long-term shift in consumer behavior that favors online and off-mall shopping. In 2020, just before the pandemic, the company announced a separate strategy, known as Polaris, which was meant to stabilize profitability and included a plan to close 125 stores. 

Much of the company’s value is tied up in real estate. It currently operates 489 Macy’s stores, 32 Bloomingdale’s locations and 158 Bluemercury stores across the US. By closing another 150 Macy’s stores, the company will be able to prioritize investment in the remaining locations and continue to expand small format, off-mall locations, Macy’s said in a statement.