Macy's to Close Dozens More Stores in 2025: A Bold New Chapter or a Desperate Move?

Macy's, the iconic American department store, has announced plans to close an additional 66 stores in 2025 as part of its "Bold New Chapter" strategy. This move comes on the heels of the retailer's decision to close 50 stores in 2024, bringing the total number of closures to 116 in just two years. While Macy's insists that this strategy will help the company return to sustainable, profitable sales growth, some industry experts and activist shareholders remain skeptical.



Macy's has been grappling with declining sales and a shrinking customer base for several years. The company's net sales have been decreasing, with a 2.4% drop to $4.7 billion in the third quarter of fiscal 2024, and comparable sales declining by 1.3%. In response, Macy's has been focusing on its higher-end, more profitable brands and moving away from malls to build smaller concept stores. However, activist shareholders Barington Capital Group, L.P. and Thor Equities LLC have criticized the company's strategy, arguing that Macy's is not maximizing the value of its real estate and that some underperforming locations, such as the company's Herald Square flagship in New York City, should be identified for closure.



Macy's CEO Tony Spring has stated that the closures of the first 50 stores have already boosted customer satisfaction scores and sales for the last three consecutive quarters, with a comparable sales increase of 2.1% in the retailer's third quarter of fiscal 2024. However, Macy's latest earnings report indicates that the company's net sales are still down, and comparable sales have declined. This suggests that the closures may not be enough to offset the ongoing challenges the company faces in the current economic environment.

As Macy's continues to implement its "Bold New Chapter" strategy, it remains to be seen whether the additional store closures will help the company return to profitability or if they will further damage its brand and customer base. Retailers like Ollie's Bargain Outlet (OLLI) have thrived by focusing on the experiential treasure hunt feel and offering lower prices than Amazon (AMZN), which has struggled to maintain its dominance in the brick-and-mortar retail space. Macy's may need to reevaluate its strategy and consider alternative approaches to remain competitive in the ever-evolving retail landscape.

In conclusion, Macy's plans to close dozens more stores in 2025 as part of its "Bold New Chapter" strategy may be a desperate move to save the struggling retailer or a bold new direction that will help it return to profitability. Only time will tell if this strategy will pay off for Macy's and its shareholders. As an investor, it is essential to stay informed about the company's progress and consider alternative investment opportunities in the retail sector.