Macy’s has announced a new turnaround plan after forecasting annual sales below market expectations due to weak demand for apparel and shoes. This plan includes the closure of 150 stores by 2026, causing a 3% drop in its shares before Tuesday’s opening bell.
Details regarding the specific locations of the stores slated for closure and the extent of employee layoffs were not provided by the retailer. Additionally, Macy’s plans to generate $600 million to $750 million by monetizing assets over the next three years.
The decision to implement this plan comes amid sluggish sales, placing the upscale retailer under the scrutiny of activist shareholders and attracting potential bidders. Arkhouse Management has initiated a proxy battle by nominating nine director candidates last week.
This new initiative follows Macy’s January announcement to close five stores and reduce its overall workforce by 2,350 jobs, representing 3.5% of its total workforce.
As part of its strategy for growth, Macy’s intends to open 15 Bloomingdale’s locations and a minimum of 30 new Bluemercury stores over the next three years, focusing on its more successful luxury brands. Despite posting a holiday quarter comparable sales decline of 4.2%, which was better than analysts’ estimates of a 5.8% drop, the company experienced a 26% decrease in net credit card revenue to $195 million, indicating financial strain, particularly among its low- and middle-income customer base, resulting in higher bad debts.
Macy’s reported a $1 billion charge in the fourth quarter related to restructuring, leading to a loss per share of 26 cents. However, excluding these items, the company earned $2.45 per share, surpassing LSEG estimates of $1.96.
For fiscal year 2024, Macy’s anticipates net sales ranging from $22.2 billion to $22.9 billion, slightly below analysts’ average estimate of $22.95 billion. Adjusted earnings per share for the same period are forecasted to be between $2.45 and $2.85, with the midpoint falling below expectations of $2.76.
