What will happen to malls when Macy's closes its stores?
Macy鈥檚 is set to begin closing nearly 40 stores at malls throughout the country. The retail giant and mall stalwart announced the decision in September of 2015, citing slow sales.
Macy鈥檚 also recently announced that it would be laying off approximately 4,000 workers after holiday profits slumped by about 5 percent during November and December. The decline was driven, in part, by slow winter clothing sales in the face of the unusually warm weather. The company also saw a drop in spending from international tourists as a result of a stronger US dollar.
While spending was down at physical Macy鈥檚 locations, online orders at Macys.com were up during the same November-December period: , up about 25 percent from a year earlier.
Some of Macy鈥檚 sales associates and service-center employees affected by the closures will be placed in other positions, The company also will be implementing a 鈥渧oluntary severance opportunity鈥� for those in upper management who face layoffs.
鈥淚n light of our disappointing 2015 sales and earnings performance, we are to become more efficient and productive in our operations. Moreover, we believe we can operate more effectively with an organization that is flatter and more agile,鈥� Terry J. Lundgren, chairman and CEO of Macy鈥檚, Inc., said in a press release.
When Macy鈥檚 announced the store closures, in September of 2015, it which stores it would be closing, but 40 stores account for approximately 1 percent, or $300 million, of Macy鈥檚 total revenue.
Macy鈥檚 announced specific closure locations earlier this month. Some of those malls where Macy's is closing up shop will 聽also be losing other stores that have traditionally vied for consumer dollars: The Eastfield Mall in Springfield, Mass., for example, also聽 JCPenney, American Eagle and RadioShack.
Such closures send a stark message about the state of the traditional consumer economy.
Analysts have estimated that of US malls will close over the next two decades, as anchor stores like Macy鈥檚, JCPenney, and Sears close and consumers continue to shift their money to shopping online. In addition, when the economy is particularly strong, consumers recently have聽chosen to save more and not spend as much outside the home.
Before Macy鈥檚 began to close additional stores, there were 770 locations around the US. The company hopes that its cost-cutting measures will save about $400 million, even as they may negatively impact fourth-quarter profits by about $200 million.
In order to help boost sales, Macy鈥檚 has with a new store concept called Macy鈥檚 Backstage, which is intended to solidify the company鈥檚 presence against off-price stores like Marshalls and TJ Maxx that have gained ground in its retail space.
Macy鈥檚 calls its Macy鈥檚 Backstage concept one that 鈥� to the world and [helps] savvy, fashion-forward bargain hunters fall in love with shopping all over again.鈥� It has opened four pilot locations in New York City.
Macy鈥檚 stocks by nearly 50 percent over the course of 2015, and despite a small recent uptick on Friday, they continue to remain low, 聽per share on Tuesday.
