Macy’s Forecasts Weaker Sales, Will Close 150 Stores Due To Slowing Demand

(CTN News) – Macy’s annual sales are expected to be below market expectations due to decreased demand for apparel and shoes. The retailer also announced Tuesday that it would close 150 stores through 2026 as part of a turnaround plan, sending its shares down about 2%

Neither the location of the stores nor the number of layoffs were provided by the department store chain. Within the next three years, the company plans to monetize assets worth between $600 million and $750 million.

David Swartz, senior analyst at Morningstar, said, “It was probably inevitable that Macy’s would close stores. But that’s still not good news, as it shows Macy’s inability to make those stores more productive.”

As a result of sluggish sales, activist shareholders have targeted the upscale retailer and potential buyers have expressed interest in bidding.

Macy’s faces a proxy battle from Arkhouse Management after the investment firm nominated nine candidates for the company’s board of directors.

In addition to the new plan, Macy’s announced in January that it would close five stores and cut 2,350 jobs, or approximately 3.5% of its overall workforce. As of the end of the fourth quarter, the retailer operated 718 stores, a decrease from seventy-three three months earlier.

In addition, it announced that it plans to open 15 Bloomingdale’s locations and at least 30 Bluemercury stores over the next three years in an effort to accelerate the growth of its better-performing luxury brands.

Despite steep discounts, it saw comparable sales decline 4.2% in the holiday quarter on an owned-plus-licensed basis, better than analysts’ expectations of a 5.8% decline.

However, net credit card revenues declined by 26% to $195 million, indicating that economic pressure, particularly among low- and middle-income customers, led to higher bad debts.

There was a $1 billion charge incurred by Macy’s as a result of the restructuring in the fourth quarter. Based on LSEG’s estimate of $1.96 per share, it earned $2.45 per share after excluding items.

As compared to analysts’ average estimate of $22.95 billion, the company expects net sales for the fiscal year 2024 to range between $22.2 billion and $22.9 billion.

Based on its forecast, adjusted earnings per share are expected to range between $2.45 and $2.85, which is below expectations of $2.76.

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