Macy’s (NYSE:M) announced plans to close 150 stores over the next three years, with 50 of them shuttering by the end of 2024, as part of a strategic shift towards luxury offerings at Bloomingdale’s and Blue Mercury. The decision comes after the department store reported a fourth-quarter loss and a decline in sales.
The company intends to focus on luxury brands, with the opening of 15 Bloomingdale’s stores and 30 Blue Mercury cosmetics locations. While Macy’s exceeded Wall Street expectations for adjusted net income and revenue, its outlook for the year ahead was conservative, leading to flat shares before the opening bell.
The department store chain is also facing pressure from activist investors, including a proxy fight from Arkhouse Management, which recently nominated a slate of nine directors for Macy’s board. Last month, Macy’s rejected a $5.8 billion takeover offer from Arkhouse and Brigade Capital Management.
New CEO Tony Spring, who took over from Jeff Gennette earlier this month, is tasked with addressing these challenges. “We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments, and compelling value,” said Spring in a statement.
Macy’s is adapting to changing consumer behaviors by accelerating the expansion of small-format stores, aiming to provide more convenience. Despite these efforts, the company announced in January that it would trim about 3.5% of its total workforce and close five locations.
Arkhouse and Brigade proposed a $21 offer for each remaining share in Macy’s, but the company expressed concerns about the financing plan and the offer’s value. Macy’s is seeking additional financing information from Arkhouse and Brigade to potentially advance talks with its board.
In its latest financial report, Macy’s posted a quarterly loss of $71 million, or 26 cents per share, compared to a profit of $508 million in the same period last year. Adjusted earnings per share were $2.45, exceeding Wall Street projections of $1.98. Sales fell to $8.12 billion, down nearly 2% from a year ago, with online sales decreasing by 4%.
Looking ahead, Macy’s expects profit for the current fiscal year to be in the range of $2.45 to $2.85 per share, with sales ranging from $22.2 billion to $22.9 billion. Analysts were expecting an annual profit of $2.77 per share on sales of $22.81 billion.
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