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Macy's turns out the lights

Posted Jan 08 2009, 01:28 PM by Anthony Mirhaydari
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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.

Related reading:

Holiday 2008: The kiss of death for retailers

January is a hot month at thrift stores

How to give holiday gifts for free

The day the malls stood still

Comments

 

Macy is always running sales and giving discounts but they have silly stipulations to those discount. I went to Macy's the day after Thanksgiving and I could only use their discount with anything ending w/98 cent. That is crazy and makes shopping to complicated. Not to mention the clothes resemble a lower quality.

They are also competing with discount stores, like Marshalls, TJ Maxx, & discount malls. I believe if their sales did not have so many stipulations and the qualit of clothing increased they would have a better chance of surviving the economy crisis. I believe T.J Maxx & Marshall will be the only retail store standing strong when the economy recovers and the customers will remember the which retail store did not accomodate their needs and will desert those retailers in the future-I know I will.

Perhaps if Macy's hadn't made the other department stores they acquired (Lazarus, Kauffmans, Marshall Fields and others) into generic Macy clones they might have had a more profitable Christmas.  I used to shop all three stores and find wonderful things to buy at all of them.  Macy's is boring and their service is practically nonexistant.  I buy most of my clothes and shoes at Kohl's now; when they give you a coupon, it's good on everything. If any other department stores are thinking about opening in Columbus, I would greatly appreciate it.  Dillards? Bon Ton (Eldar Beerman)?  Parisienne?  Anyone?

If Macy's is going to cater to the up scale market, then they should have a classic selection of business and formal wear. I feel they want to be up scale but sell to the younger crowd. Pick a customer

What sales?  After Christmas and New Year's when other stores had great sales going on, Macy's did not.  I agree that discount stores like Kohl's, TJ Maxx, etc...will come out on top.   Like every other place has had to do, lower your prices.

must store donot carry women dresses for middle age ladies   and plus size that are attractive older ladies . i havent found a dress in any stores  just pants.  need more choices in the dress department

thank you

All the money that Macy's spends on advertisements, discounts offers and gimmicks to get the customer into the store could be better spent in offering the customer better prices on merchandise.  I personally am sick of what I consider Macy's "junk mail".  There is always some reason why I cannot get the discount I have been offered.  Too many hoops to jump in order to get a discount.  And offering me a different color card to spend more money in you store does not do anything to make me feel more important.  You insult my intelegence and that of many of you customers.  What a pitty.  You expect better from Macy's.

Much as the liberal news media would like you to believe that Macy's is doomed to destruction, this really has nothing to do with the current economy.  

Macy's announces yearly closures of underperforming  stores and also announces NEW opportunities for business and stores being built in growing areas.   Yes, these are closures of 11 stores.   But consider this:

Anyone aware that Macy's announced in 2008 the opening of 5 new stores planned for 2009 / early 2010?    Yes - Phoenix (3), Las Vegas, and Sarasota, FL.  These are growing markets where the opportunity to expand the customer base in profitable terms exist.   Anyone aware that there will be a new Bloomingdale's in Dubai in 2010? There will also be THREE Soho-type Bloomie's opening in Georgetown/Washington DC, Santa Monica CA and San Jose CA in 2010-2011.

This information is all available on their website.

Look at the ages of most of these closing stores.   Cost to renovate versus closing must be considered as well.  Most are in the vicinity of other locations so business is being shifted there.

I will agree that yes, the coupons and shopping passes are a pain in the behind - too many exclusions, too hard to read.  Someone mentioned Dillards & Parisienne - both of these companies are in trouble themselves, especially Dillards - so don't expect too much from them.   They are closing stores and not opening more in better areas.   And my local Macy's had TREMENDOUS sales after Christmas - huge bargains and great prices.  I bought Waterford for an extra 50% off the markdown, and nice women's clothing for 75% off original prices; Tommy Hilfiger men's polo shirts for 19.99.

Please don't be so quick to dogpile Macy's, even though it seems to be the popular thing to do.

I rarely have an issue with Macys - they are better than the Bon-Ton stores (i.e. Elder Beermans which I absolutely hate now because of their lousy sales and coupons.....I watched a particular piece of simple silver jewelry (ear rings) and for 6 months the same discounted sale remained on the item...they had a coupon sale - which I did not have the "coupon" and the duh sales clerk wouldn't even give me the lousy 20% OFF - like what the heck did she have to loose eh? Anyway I go Macy's over many retailers any day...never have an issue with a coupon - got a pair of Lucky brand jeans marked $104 - for $32.....DURING xmas - a $280 suit for under $50 (Jones) so you can't always find those type of bargains at TJ MAX either - and I love that store too - you just have to make it a point to watch for sales and as time goes on with this economy situation - you'll find super deals out there IF you are willing to take time to "shop"

I am not sure about the other stores but this article could be crying wolf if the others like the Brooklyn Center store are in dying malls. In the Brookly Center Mall there was very few customers per day before the economy fell off. So this is a good time for Macy's to close this store. So maybe it is just good business and not the economy?

I have found incredible deals at Macy's on the 50% off and 70% clearance racks. I also am a Rewards customer so I get additional benefits from using my credit cards along with the deep clearance prices. The trick is to realize the savings pay with the credit card and then write a check to pay on the balance or to pay off the balance.  I was very pleased when Macy's returned back to the Kansas City area.

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