This week’s announcement by US retail giant, Macy’s, that it was closing 100 stores (12% of its total) was greeted favourably particularly by the share market. Shares rose 17% on the news.
Macy’s has been suffering declining sales at its bricks-n-mortar stores over the last 6 reporting quarters. They hasten to add that stores remain profitable but analysts say it is a question of preparing for the future, and adjusting to consumer trends. Monetising the high value Macy’s real estate is also seen as a bonus. Macy’s estimate that closing the 100 stores will mean a reduction of just 3% on annual sales after allowing for absorbing sales through its website and nearby stores. It is expected that the cost savings and re-focus should ultimately boost overall productivity.
Analysts suggest that other US department store chains may need to assess their own operations although Nordstrom seems to be the most successful at adjusting to millennial shoppers with their focus on online and in-store offers including link-ups with successful online operators like Australia’s Shoes Of Prey. Nordstrom reported better-than-expected comparable sales and quarterly profit this week and their shares rose 12%.