Macy's will shut down 15 % of its department stores

Macy's Inc. on Thursday posted second quarter results that topped analysts' expectations.

Macy's shares rose as much as 17 percent to $39.76 in morning trading on Thursday, their biggest intraday percentage gain in seven years.

Macy's said it plans to shutter 100 more stores, representing about 14 percent of its total, as it tries to turn around its business after six quarters of falling sales. Macy's, which flourished during the Great Recession, is now believed to be suffering from increased competition from fast-fashion retailers like H&M, discounters like T.J.

The announcement comes on the heels of Wednesday's news from Coach that it will stop selling handbags and leather goods at about 250 department stores across North America because the stores' steep discounts are hurting the luxury perception of the brand among shoppers. And it's expanding its offerings on exclusive launches including one backed by Sir Elton John and Lady Gaga.

Macy's has a store at Glenbrook Square mall in Fort Wayne and the two nearest stores to that location are in Muncie, Indiana and Lima, Ohio.

The company, which also owns the more-upscale Bloomingdale's chain, has been experiencing falling sales and profits at its almost 900 stores nationwide, including its Bloomingdale's locations. Most of these stores will close early in 2017, with the balance closing as leases and certain operating covenants expire or are amended or waived. Excluding one-time items, per-share earnings were 51 cents, topping the 48 cent estimate of analysts. 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).

Together, the annual sales volume of the 100 locations to be closed is expected to be about $1 billion.

Furthermore, Macy's reported that same-store sales decreased by 2% when compared to previous year, but that was better than the 4.4% drop analysts were forecasting. On an owned basis, second quarter comparable sales declined by 2.6 percent. In the first quarter, the company reported a 0.4 percent dip in in that measure, reversing five straight quarters of growth.

The company said it was sticking to its outlook.

Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, which represents some of Macys workers, said, “Its essential for Macys to invest in their people and in their stores in order to create an atmosphere that customers want to experience.”. Some forecasts expect Amazon to surpass Macy's as the largest online retailer of clothing next year, the AP reports.



Other news