Macy's turns out the lights
Posted
Jan 08 2009, 01:28 PM
by
Anthony Mirhaydari
Rating:
After a terrible holiday shopping season, Macy's (M) announced the closure of 11 of its 859 locations as it fights to return to profitability in what company executives call "the most challenging economic environment in memory."
The company also limited its December same-store sales decline to a better than expected 4% by sacrificing margins through heavy discounts. Analysts were expecting a 6.2% drop. Fourth-quarter earnings guidance was revised down to between 90 cents and $1 a share from $1.10 to $1.30.
For the operator of its namesake and Bloomingdale's department stores, these store closures aren't likely to be the last as the retail landscape -- especially for mall anchors -- changes dramatically. The problem is that the mass market discounters like Target (TGT) and Wal-Mart (WMT) are moving upmarket in apparel quality and style while offering the value and convenience consumers are seeking right now. As an example, down at my local Wal-Mart I noticed half decent $99 wool-blend overcoats next to a rack of bean dip and tortilla chips.
To fight off these competitive threats Macy's, through its My Macy's localization effort, is trying to cater its merchandise assortment and in store décor to better connect with customers and offer something more than a generic shopping experience. The initiative involves roughly 230 stores, but its efforts could be delayed due current economic woes. The company also plans "to continue to selectively add new stores while closing those that are underperforming."
The list of stores to be closed can be found below. Final clearance sales are to begin within the next week.

Disclosure: The author does not own or control shares in any of the companies mentioned.
Anthony Mirhaydari is a contributor to the Strategic Advantage investment newsletter. He can be contacted at anthony.mirhaydari@live.com. Feel free to comment below.
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