Macy’s just announced its quarterly earnings: There’s good news for shareholders, but bad news for shoppers and employees. Profits and revenue were better than expected. But the company is in the middle of a fight with investors that want to take the company private, so it has to do more than that to maintain control of itself. To that end, the company told investors that it will be closing 150 stores over the next three years.
“Over the past several years, we have taken proactive actions to fortify our operations, including strengthening our balance sheet, managing expenses and tightening inventory controls,” COO and CFO Adrian Mitchell said in a statement. “The dedicated work of our teams delivered a solid close to 2023 and provides a strong foundation for us to execute A Bold New Chapter.”
The closures also mean a bold new expense, to the tune of $1 billion. Macy’s stock is up about 6% in Tuesday (Feb. 27) trading.
Big pivot
Macy’s doesn’t want to be a mall anchor anymore, so its new strategy is to put more of an emphasis on smaller stores. It also wants to invest more in its upscale retailers, like department store Bloomingdale’s and skincare chain Bluemercury.
On an earnings call Tuesday (Feb. 27), CEO and chairman-elect Tony Spring said those footprints will increase by 20% in the same period that the Macy’s shops will be closing. (Spring was installed by the board to replace his predecessor Jeff Gennette, though the change won’t be made permanent until the company’s annual shareholder meeting late this year.)
Activist fight
The announcement also comes as activist investors jockey to take more control of the brand. Two investment firms, Arkhouse Management and Brigade Capital Management, offered Macy’s shareholders $5.8 billion to take the company private in December. Arkhouse specializes in real estate, and part of its buyout aim would be to cash in on selling off the retailer’s properties. Macy’s, which would rather focus on selling stuff to people, rejected the offer in January. Last week, the Arkhouse and Brigade nominated nine people for the 14-member Macy’s board. Spring said on the earnings call that the company was evaluating those candidates, though he sounded confident that outside help was unneeded.
“We are leaders, not followers,” he said. “While we have missed the mark in some years, we’re self-aware and have developed a bold strategy to deliver a better experience for our customers.”