Macy’s Raises Store Closures to 65 Before Year-End

Shoppers enter a Macy's department store in Bay Shore, N.Y., on Dec. 12, 2023. Ted Shaffrey/AP Photo

Macy’s will close more stores than earlier expected during this fiscal year under the company’s revitalization program as the retail chain struggles with falling revenues.

“We now expect to close about 65 locations this year, up from our prior expectation of 55 and 50 at the beginning of the year,” Adrian Mitchell, CFO of the company, said during the company’s third-quarter earnings call on Dec. 11.

Macy’s CEO Tony Spring said the closures are set to “occur post-holiday.” Store closures are part of the company’s “A Bold New Chapter” initiative announced in February that aims to return the company to growth.

The plan involves shuttering roughly 150 unproductive stores through 2026, including about 50 by the end of the fiscal year (the Saturday closest to Jan. 31).

Since the second quarter of 2022, the company’s revenues have registered a year-over-year decline every quarter.

In the most recent, third-quarter 2024, period, total revenues were at $4.9 billion, down from $5.03 billion per year back. Net income fell to $28 million from $41 million during this period.

As of Nov. 2, Macy’s operated 459 stores under the brand name and also ran 32 Bloomingdale’s outlets.

When “A Bold New Chapter” was announced, Macy’s stated that the plan would enable the company “to successfully drive sustainable, profitable growth, and create shareholder value.”

Macy’s share price tumbled after the earnings release but has since mostly recovered. The stock is down by more than 15 percent year-to-date as of the close of the market on Dec. 13.

Strained Consumer Spending

Macy’s store closures come as Americans have scaled down their spending habits. A July survey from TD Bank revealed that 30 percent of respondents had reduced their spending, citing concerns over the economy despite inflation slowing down.

More than 40 percent changed their financial priorities over the previous year.

“Among those whose priorities have shifted, 27 percent report covering daily living expenses such as groceries and utilities is the priority that has changed the most,” the survey reads.

However, there has been a recent turn in consumer sentiment. A Dec. 11 report by McKinsey notes that consumer optimism in the United States has turned positive, hitting its highest level since before the COVID-19 pandemic.

The report attributed the optimistic upsurge to several factors, including a swift result for the U.S. presidential race, rising wages, and low rates of unemployment.

“Yet despite the new tide of optimism, consumers across income levels and generations said they plan to keep their spending habits relatively subdued, particularly in discretionary and luxury categories,” the report reads. “Their reported spending intentions suggest consumers are willing to delay immediate gratification in favor of long-term financial stability.”

In addition to Macy’s, several major retail chains have announced store closures this year. In October, convenience store chain 7-Eleven stated that it intends to shutter 444 underperforming outlets to manage costs and boost efficiency.

The company stated that the North American region was seeing a “tough consumer spending environment, particularly among lower- and middle-income earners.” People’s wages declined under the pressure of factors like inflation and interest rates, according to the company.

Earlier in March, Dollar Tree Inc. announced plans to shut down roughly 600 Family Dollar stores across the United States to boost profitability.

The lower-income customer base of Family Dollar was affected by rising prices and a reduction in government benefits like the Supplemental Nutrition Assistance Program, company executives said at the time.

In June, Walgreens Boots Alliance, parent company of the Walgreens pharmacy chain, stated that it planned to close several underperforming stores over a three-year period. CEO Tim Wentworth cited the state of the economy as a challenge to the company.

“We do not anticipate significant improvement in the U.S. consumer spending backdrop,” he said. “We are especially seeing signs of strain on the lower-income consumer driven by accumulated inflation and depleted savings.”