Macy’s to Close 100 Stores

Macy’s Inc. said Thursday that it will close about 100 of its full-line stores next year – some 15% of its full-line store base – as the struggling retailer grapples with rapid changes in people’s buying habits.

This announcement came after the retailer committed to closing 40 of its stores back in January.

Shares of other department stores also surged. On an owned basis, second quarter comparable sales declined by 2.6 percent.

Nordstrom reports later on Thursday and J.C. Penney on Friday.

Past remarks by Macy’s officials suggest the downtown Minneapolis store would likely survive, said Steve Cramer, president and CEO of the Minneapolis Downtown Council.

The location of the stores to be closed has yet to be announced.

Despite these poor numbers, Gap CFO Sabrina Simmons said that the company “made progress on streamlining initiatives and continued to see signs of improvement in our larger brands”. That trend seemed to level off in the quarter as summer travel encouraged more spending, CEO Terry Lundgren said in a statement.

“This country is over-stored given evolved customer shopping habits”, said Macy’s Chief Financial Officer Karen Hoguet in a conference call this morning with Wall Street analysts.

About 90 Macy’s stores have been closed in the last six years, at the same time 13 new ones have opened, company officials said. Five analysts surveyed by Zacks expected $5.75 billion.

Retail industry analyst at Consumer Edge Research David Schick said: “Stores, footage, that retailers either lease or own can nearly be a liability today, right?”

“As far as the department-store sector goes, it’s a shrinking sector”, said Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm headquartered in NY.

The majority of the stores will be shutting their doors early next year, representing the shuttering of about 14 percent of all locations.

Macy’s outline its new strategies to boost sale by investing in strong stores, highlighting new vendors, increasing the quantities and quality of staff and mightily investing in new methods and technology.

Macy’s reported second-quarter earnings of 54 cents a share, 9 cents above the consensus estimate but down from 64 cents a year earlier. Turnover dropped 3.9 % to 5.9 billion dollars (5.3 billion euro), while its net profit fell sharply, from 217 million dollars (194 million euro) to 11 million dollars (10 million euro).

Annual sales for the approximately 100 locations to be shuttered is projected at roughly $1 billion, excluding sales expected to be diverted to nearby stores.