New York Post August 11, 2016 by Lisa Fickenscher
Macy’s is closing 100 stores and Wall Street rewarded it with a standing ovation.
Shares shot up nearly 17 percent Thursday after the nation’s biggest department store chain announced the closures and pointed to an improvement in sales trends after six straight quarters of declines.
Slimming down the 748-store count by 14 percent is a key part of Macy’s turnaround strategy, which also includes leveraging its significant real estate assets.
The retailer is selling its highly successful men’s store in Union Square, San Francisco, with plans to reinvest the valuable real estate proceeds in other parts of the company, such as beefing up its digital bona fides.
“We now believe we are set up well to proceed to a comeback,” Macy’s Chairman and CEO Terry Lundgren said in a statement. “Our sales strengthened month-by-month throughout the second quarter. This trend improvement gives us confidence in our plans for the back half of the year, and in our strategic planning for improvements to our business model going forward.”
Total revenue declined 3.9 percent to $5.87 billion in the quarter ended July 30, but that was better than a 7.4 percent decline in the first quarter. Same-store sales fell 2 percent compared with a 5.6 percent drop in the first quarter.
Management attributed the improvement to hot weather trends, which drove shoppers into stores, as well as more tourists shopping in its major flagship stores.
The company did not identify which stores it will close and said some may remain open past this year depending on their current lease expirations.
“While it will shrink the company somewhat, these closings will help us to accelerate our growth,” CFO Karen Hoguet during an earnings call with analysts.
Macy’s estimates the sales decline from the loss of those stores will cost it as much as $1 billion next year. Earlier this year, the company said it would close 41 stores.
Macy’s did not disclose how many jobs would be lost, but the Retail, Wholesale and Department store Union in New York said Macy’s problem is not too many stores but a poor shopping environment.
“Macy’s needs to create an atmosphere where customers want to come to their stores,” said Stuart Appelbaum, president of the union, which represents 8,000 Macy’s and Bloomingdale’s employees in the New York metro area. “Macy’s trying to just become another Amazon would be a mistake.”
Macy’s earned $11 million, or 3 cents per share, in the quarter ended July 30, compared with $217 million, or 64 cents, a year ago. Excluding one-time items, per-share earnings were 51 cents, topping the 48-cent estimate of analysts.
The stock was up 16.9 percent, to $39.75, in early afternoon trading.
(I was just in Macy's 34th St today and it was bustling. So it is not closing anytime soon. Where it will close is in shopping centers all over the country where it is the "anchor store." You are familar with that I am sure. A Macy's or a Sears or JC Penny sets up in a mall and a bunch of other stores tie on and operate in the same area. Once the big guy goes the rest of them fail. So your mall becomes a ghost town. You know who has a lot to do with this. Amazon. Trump made noises about looking at Amazon's anti-trust wise because of his problems with the Washington Post and Jeff Bozo. I don't know if that will have any effect. But just think of all the jobs lost and the income lost and other businesses that will go belly up because of this. It is not pretty.)