Macy's announced on Tuesday that it is entering "A Bold New Chapter," this time focusing on a more luxurious store design as part of its turnaround strategy, which involves shifting its target market from lower-income to wealthier consumers.
"Our portfolio of iconic and globally recognized nameplates, healthy balance sheet and fortified operations position us to execute A Bold New Chapter. This strategy is designed to create a more modern Macy's, Inc. that is expected to generate meaningful value for our shareholders in the years ahead," Tony Spring, chief executive officer of Macy's, wrote in the earnings report.
The pivot first includes the big-box retailer closing 150 underperforming stores over the next three years. It expects to close at least 50 of these stores by the end of this year. By 2026, Macy's footprint will shrink to about 350 stores, slightly more than half its number before Covid.
Second, the turnaround strategy focuses on higher-end brands and will include 15 new Bloomingdale's and 30 Bluemercury stores by 2026.
Bloomberg noted, "The announcement, accompanied by fourth-quarter results, follows a $5.8 billion buyout offer from Arkhouse Management Co. and Brigade Capital Management in December. Macy's rejected the offer, but last week, Arkhouse nominated nine directors to Macy's board as the activist investor persists in its efforts."
The turnaround plan to chase wealthier shoppers comes as Spring, who had a four-decade career at Bloomingdale's before shifting over as the head of the parent company, warned: "The shopper is still under pressure."
David Swartz, a retail analyst at Morningstar, noted that there is far less competition for Macy's in the luxury department space and expects a "great future."
The pivot comes as shares have crashed 71% since peaking at $69 a share in mid-2015.
In summary, Macy's is giving up on the working poor as the Biden administration says the middle class is doing better than ever.
