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News / Business

Macy’s to close 150 stores through 2026; future of Vancouver and Washington locations uncertain

By Renata Geraldo, The Seattle Times
Published: March 11, 2024, 7:33am

Macy’s will close 150 “underproductive stores,” leaving the future of 22 Washington stores and their workers uncertain.

The strategy, dubbed “A Bold New Chapter,” includes opening up to 45 new Bloomingdale’s and Bluemercury stores through 2026. The retailer is also aiming to upgrade and increase investment at its remaining 350 stores.

“A Bold New Chapter serves as a strong call to action. It challenges the status quo to create a more modern Macy’s,” said CEO Tony Spring, who took on the chief executive role this month. He was previously CEO of Bloomingdale’s and most recently the president of Macy’s. Spring succeeded former CEO Jeff Gennette.

While the retailer’s footprint has contracted in Washington, it continues to operate in 15 cities in the state, including Vancouver, Bellevue, Lynnwood, Redmond and Tukwila. Macy’s declined Tuesday to say which stores, if any, it planned to close in the state. Macy’s also operates three stores in the Portland area and several more in Oregon.

The 150 stores to be closed by the end of 2026 account for less than 10% of Macy’s total sales, according to the company. On Tuesday, Macy’s reported a loss of $71 million in the fourth quarter, which includes the holiday season, compared with a $508 million profit reported in the same quarter the previous year. Sales were $8.1 billion in the fourth quarter, down 1.7% from the previous year.

It is unclear whether any of the 22 stores in Washington are considered underperforming.

Macy’s took on an outsize presence in the Seattle area in 2005, when its parent company at the time acquired The Bon Marché and the storied retailer’s downtown Seattle flagship store. Macy’s pulled out of the landmark storefront at Third Avenue and Pine Street in 2019. It closed its Northgate Mall store, another former Bon Marché location, the following year.

Three Washington stores in Lynnwood, Tukwila and Bellingham are represented by the United Food and Commercial Workers 3000 union, which claims the plan fails to consider the harm it will do to thousands of employees on whom the business relies.

The union said it is prepared to protect member rights if Macy’s intends to close Washington stores.

“The best way to bring customers into stores is to retain the workers who understand fashion, health and beauty and so much more,” said Joe Mizrahi, secretary-treasurer of UFCW 3000.

In January, Macy’s said it would trim about 3.5% of its total workforce, roughly 2,350 employees, and close five locations. Spring told The Associated Press during a phone interview that he didn’t have an estimated number of workers affected since the closures will happen over a three-year period.

Macy’s did not provide a list of planned closures, but San Francisco’s mayor, London Breed, confirmed that the retailer’s sprawling store in the city’s Union Square downtown shopping district would be shuttered. While not among the 50 closures expected by the end of the year, Breed said she was told by Macy’s that it is seeking a buyer for the San Francisco property.

“It’s hard to think of Macy’s not being part of our city anymore,” she said.

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Macy’s has for years come up with plans to improve its financials, but has struggled because of intense competition, a rise in specialty stores and online shopping, and a decline in mall foot traffic. Similar pressures forced rivals Neiman Marcus and JCPenney to seek bankruptcy protections in recent years; both emerged from bankruptcy diminished.

A Bold New Chapter isn’t the first strategy Macy’s has announced to turn its business around.

In early 2020, the retailer announced a three-year strategy called “Polaris,” which aimed to close 125 stores, eliminate approximately 2,000 positions, expand its loyalty program and build four $1 billion brands. In 2017, Macy’s unveiled a “North Star” strategy that planned growing private brands and the rollout of a reduced-price section called “Backstage.”

The difference with A Bold New Chapter is the large number of stores that are closing, Morningstar analyst David Swartz said. Macy’s turnaround efforts have been driven by a struggling department store model.

“Big changes like this at Macy’s are not that uncommon,” Swartz said. “And there is a new CEO in place, so things are likely to change because of that anyway.”

Macy’s sales growth has struggled since its 2014 peak because of a decline in the mall business and a rise in specialty stores and online shopping, Swartz said.

Instead of going to a department store to look for makeup, customers can go to Ulta or Sephora, for example. Coupled with online shopping, specialty stores increase competition. Traditional malls are also on the decline because people are shopping closer to where they live, he said.

“It’s a business that has no sales growth,” he said. “It’s the whole industry.”

Still, Swartz wrote that Macy’s has its strengths, such as more than 40 million annual customers, 30 million loyalty program members and more than $7 billion in annual digital sales.

Macy’s is trying to seek out upscale shoppers — a mainstay of the sole remaining Seattle-based department store giant, Nordstrom — by expanding the footprints of its Bloomingdale’s brand and luxury beauty retailer Bluemercury because they have less competition than department stores, Swartz said.

The advantage for Bloomingdale’s and Bluemercury is that small-format stores in urban environments and strip malls are performing better than traditional malls, Swartz said. Bluemercury is often in urban environments and Bloomingdale’s has its small-format store, Bloomie’s. A Bloomie’s location opened at University Village in Seattle in November.

The strategy unveiled Tuesday also comes as Macy’s is facing pressure from activist investors.

Last month, Macy’s declined a $5.8 billion takeover offer from hedge fund Arkhouse Management and investment management firm Brigade Capital Management because of valuation and deal financing concerns. Last week, Arkhouse launched a proxy fight for Macy’s when it nominated a slate of nine directors for election to the retailer’s board.

Still, Swartz said, Macy’s is “under even more pressure than they would have been otherwise to get things fixed quickly.”

This report includes information from The Associated Press.

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