Why is Macy's closing 150 stores? Reason explored as retailer decides to expand Bloomingdale's and Bluemercury

On Tuesday, February 27, Macy's announced it would close about 150 stores in the next three years. According to CBS News, this is the retailer's most recent attempt to revive its operations to stave off an activist investor takeover proposal.

The department store further declared that it would concentrate on growing its two luxury brands, Bluemercury and Bloomingdale's. Macy's will close another 50 stores in the next year, leaving them with just over 300 stores after restructuring.

According to sources like Money Control, the company provided a cautious outlook for the year. Before the opening bell, its shares decreased by 2%.

On the other hand, as per Forbes, as part of the revised approach, Macy's would prioritize premium labels, adding that over the next three years, it plans to open at least 30 new Bluemercury stores and roughly 15 new Bloomingdale's stores.

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Around 30% of Macy's store locations, or more than 100 stores, will close

To turn around its business and start "a bold new chapter" while thwarting an impending takeover proposal, Macy's unveiled plans on Tuesday to close 150 locations and grow its Bloomingdale's and Bluemercury chains.

After heading Bloomingdale's for nine years, CEO Tony Spring indicated that closing the failing locations would eventually help the company stabilize its sales with an emphasis on customer service and modernized product lines.

As per CBS News, in a conference call with investors on Tuesday, February 27, Spring stated:

"The problems facing Macy's are similar to what I first encountered at Bloomingdales — it's going back to basics and balancing the art and science of retail."

Macy's also stated that as part of a strategy, it will close all of the "underproductive" and underperforming outlets by 2026. As per Yahoo Finance, Spring addressed this and said it will:

"Fast-track our path to increased market share, profitable, sustainable growth, and value creation for our shareholders."

Furthermore, as per Forbes, Spring also said:

"A Bold New Chapter serves as a strong call to action. It challenges the status quo to create a more modern Macy’s, Inc. We are making the necessary moves to reinvigorate relationships with our customers through improved shopping experiences, relevant assortments and compelling value."

According to the CBS News, he further stated:

"Our threshold to keep a store open has become more stringent. In the past we may have continued to operate a store that was cash flow positive. Now the bar has been raised."

Moreover, the Globe and Mail reported that as part of the plan, the company intends to modernize its 350 surviving store locations. It also said that additional salespeople will be assigned to fitting rooms and shoe departments. Additional visual displays like mannequins will be added.

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On the other hand, as per CBS News, to boost sales, Macy's is expanding small-format stores faster so they can offer their consumers greater convenience. In October 2023, it declared that it would add as many as 30 small-format shops by the autumn of 2025, for about 42. Fall marks the beginning of the following expansion phase.

Nevertheless, Macy's did not specify which stores it intended to close or how many of its employees would be impacted by the closures, according to Forbes.