Macy's, Inc. announces actions to streamline store portfolio
Today announced a series of actions to streamline its store portfolio, intensify cost efficiency efforts and execute its real estate strategy. These actions bolster the company’s strategy to further invest in omnichannel capabilities, improve customer experience and create shareholder value. The actions include:
The closure of 68 stores and the reorganization of the field structure that supports the remaining stores, reinforcing the strategy of fewer stores with better customer experience. These store closures are part of the approximately 100 closings announced in August 2016.
The significant restructuring of the Macy’s, Inc. operations to focus resources on strategic priorities, improve organizational agility and reduce expense.
The sale of properties consistent with the previously announced real estate strategy.
The actions announced today are estimated to generate annual expense savings of approximately 550 million Dollar, beginning in 2017, enabling the company to invest an additional 250 million Dollar in growing the digital business, store-related growth strategies, Bluemercury, Macy’s Backstage and China. These savings, combined with savings from initiatives implemented in early 2016, exceed the 500 million Dollar goal communicated in fall of 2015, one year earlier than expected.
"Over the past year, we have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time. While we are pleased with the strong performance of our highly developed online business, as well as the progress we have made on selling and visual presentation programs and expense reduction initiatives in 2016, we continue to experience declining traffic in our stores where the majority of our business is still transacted. Given the overall trends challenging us and the broader retail industry, and the time needed to execute new strategies, we expect our 2017 change in comparable sales to be relatively consistent with our November/December sales trend," said Terry J. Lundgren, chairman and chief executive officer of Macy’s, Inc.
"Our omnichannel strategies continue to evolve based on the changes in our customers' shopping behaviors, including a focus on buy online, pickup in store and mobile-enabled shopping. In addition, we have invested in and enlarged our customer data and analytics team, which will help drive our new marketing strategies for 2017. Whether it is improving corporate agility, enhancing our customer engagement strategies, or continuing to capitalize on the potential value of our real estate assets, we remain focused on the actions that will ultimately improve our financial results and provide the greatest return for our shareholders."
In conjunction with today's announcement, approximately 250 million Dollar of charges or 50 cents per share (of which approximately 210 million Dollar is expected to be cash) are expected to be recorded in the fourth quarter of 2016. These charges were not previously included in earnings guidance provided by the company and are in addition to the 249 million Dollar recorded in the second quarter as an estimate of asset impairment and other charges primarily related to 2016 store closings.