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Macy’s Discloses First 68 of 100 Store Closures

Actions Bolster Strategy To Further Invest In Omnichannel Capabilities
January 4, 2017
Macy's (NYSE:M) announced the first 68 of 100 stores it plans to close and the elimination of about 6,200 employees as part of a long-awaited series of actions to offset declining sales in its retail operations.

The department store retailer said the actions are expected to achieve approximately $550 million in annual cost savings beginning in 2017. It also plans to invest $250 million in growing its online business as well as several store-related growth strategies, including its recent Bluemercury acquisition, its Macy's Backstage discount operation, and expansion in China.

These savings, combined with cost cuts in early 2016, exceed the $500 million goal Macy's communicated to its investors in fall of 2015, one year earlier than expected.

However, Macy's comparable sales declined by 2.1 percent in the months of November and December 2016 combined, compared to the same period last year. Macy’s had anticipated sales during the crucial holiday sales period would be stronger.

"Over the past year, we have been focused and disciplined about making strategic decisions to position us to gain market share and return to growth over time," said Macy's chairman and CEO Terry J. Lundgren. However, he added the retailer continues to see declining traffic in its stores.

“Given the overall trends challenging us and the broader retail industry, and the time needed to execute new strategies, we expect our 2017 change in comparable sales to be relatively consistent with our November/December sales trend,” Lundgren added.

Store Portfolio Restructure


Of the 68 stores identified by the Cincinnati-based retailer for closing, 58 are in malls, six are stand-alone locations and four are in lifestyle or other centers. Three of the properties already closed, 63 will be closed in early spring 2017 and two will be closed in mid-2017. Three other locations were sold, or are to be sold, and are being leased back.

Macy's is expected to close approximately 30 additional stores over the next few years as leases or operating covenants expire or sale transactions are completed.

However, while reducing overhead, closing stores also negatively impacts the retailer's sales. As a result of closing 63 Macy's stores in early 2017, along with the three closed mid-year 2016, the company's 2017 sales are expected to be negatively impacted by approximately $575 million.

“It is essential that we maintain a healthy portfolio of the right stores in the right places,” Lundgren said. “We are closing locations that are unproductive or are no longer robust shopping destinations due to changes in the local retail shopping landscape, as well as monetizing locations with highly valued real estate,”

Other cost-saving steps taken by Macy's include:
  • Sold its Stonestown store in San Francisco, CA, to General Growth Properties (GGP). Macy's, Inc. will lease this store back from GGP as that company develops plans for this location.
  • Sold its downtown Portland, OR, store.
  • Agreed to sell its downtown Minneapolis store to the 601W Companies, whose intention is to redevelop the building into creative office space on the upper floors and to pursue retail opportunities on the street and skywalk levels. This transaction is expected to close by fiscal year end.

    Four of the stores to be closed are at CBL & Associates Properties' (NYSE:CBL) malls: at Jefferson Mall in Louisville, KY; Layton Hills Mall in Layton, UT; Parkdale Mall in Beaumont, TX; and Eastland Mall in Bloomington, IL.

    At Layton Hills Mall, CBL said it is finalizing negotiations with a new anchor store to replace Macy’s. The remaining three stores, aggregating 444,000 square feet, are currently owned by Macy’s. CBL said it has entered into an agreement to buy the anchor locations from Macy’s for a total consideration of $5 million.

    "The closure of these locations was fully anticipated," said Stephen Lebovitz, CBL's president and CEO. “In anticipation of these closures, we have proactively engaged in discussions with a number of prospective users. Our next steps will be to finalize negotiations and redevelopment plans for the remaining three malls. Once leases are signed, we will share specific names joining each mall, as well as construction and opening timelines. The list of users interested in these specific locations includes sporting goods, fitness centers, off price boxes, restaurants, theaters and entertainment concepts, all of which will enhance the performance of the malls overall.”

    Three closings affect PREIT (NYSE: PEI) malls (Moorestown, Plymouth Meeting and Valley View Malls).

    "Demand for the Macy's spaces is robust with new opportunities situated in desirable locations in quality, high barrier-to-entry markets," said PREIT (NYSE: PEI) CEO Joseph F. Coradino. "We are in the process of finalizing transactions to control the real estate in two of the three locations and are negotiating terms on the third. At Valley View Mall, we are in advanced discussions with a traditional department store and for Moorestown and Plymouth Meeting Malls, we are negotiating LOIs for replacement stores and anticipate making detailed announcements in the near future."

    "We are particularly pleased that the announced Macy's closings at competitive malls in Massachusetts, Virginia and Greater Philadelphia will serve to further strengthen our premier assets with existing Macy's stores located in these markets including: Cherry Hill Mall, Willow Grove Park, Springfield Town Center and Dartmouth Mall," Coradino continued.

    Macy's Store Closings Announced January 2017


  • Laurel Plaza, North Hollywood, CA (475,000 square feet; opened in 1995; 105 associates);
  • Ala Moana Jewel Gallery, Honolulu, HI (2,000 square feet; opened in 1986; 9 associates);
  • Valley Fair, West Valley City, UT (106,000 square feet; opened in 1970; 53 associates);
  • Greenwood, Bowling Green, KY (124,000 square feet; opened in 1980; 63 associates);
  • Carolina Place, Pineville, NC (151,000 square feet; opened in 1993; 69 associates);
  • Douglaston, Douglaston, NY (158,000 square feet; opened in 1981; 144 associates);
  • Downtown Portland, Portland, OR (246,000 square feet; opened in 2007; 85 associates);
  • *Lancaster Mall, Salem, OR (67,000 square feet; opened in 1980; 53 associates);
  • Oakwood Mall, Eau Claire, WI (104,000 square feet; opened in 1991; 55 associates)

    Year-End Closings


  • Mission Valley Apparel, San Diego, CA (385,000 square feet; opened in 1961; 140 associates);
  • Paseo Nuevo, Santa Barbara, CA (141,000 square feet; opened in 1990; 77 associates);
  • Lakeland Square, Lakeland, FL (101,000 square feet; opened in 1995; 68 associates);
  • Oviedo Marketplace, Oviedo, FL (195,000 square feet; opened in 2000; 83 associates);
  • Sarasota Square, Sarasota, FL (143,000 square feet; opened in 1977; 86 associates);
  • University Square, Tampa, FL (140,000 square feet; opened in 1974; 73 associates);
  • CityPlace, West Palm Beach, FL (108,000 square feet; opened in 2000; 72 associates);
  • Georgia Square, Athens, GA (121,000 square feet; opened in 1981; 69 associates);
  • Nampa Gateway Center, Nampa, ID (104,000, square feet; opened in 2009; 57 associates);
  • Alton Square, Alton, IL (180,000 square feet; opened in 1978; 54 associates);
  • Stratford Square, Bloomingdale, IL (149,000 square feet; opened in 1981; 87 associates);
  • Eastland, Bloomington, IL (154,000 square feet; opened in 1999; 55 associates);
  • Jefferson, Louisville, KY (157,000 square feet; opened in 1979; 52 associates);
  • Esplanade, Kenner, LA (188,000 square feet; opened in 2008; 101 associates);
  • Bangor, Bangor, ME (143,000 square feet; opened in 1998; 65 associates);
  • Westgate, Brockton, MA (144,000 square feet; opened in 2003; 79 associates);
  • Silver City Galleria, Taunton, MA (152,000 square feet; opened in 1992; 82 associates);
  • Lakeview Square Mall, Battle Creek, MI (102,000 square feet: opened 1983; 51 associates);
  • Eastland Center, Harper Woods, MI (433,000 square feet; opened in 1957; 121 associates);
  • Lansing, Lansing, MI (103,000 square feet; opened in 1979; 57 associates);
  • Westland, Westland, MI (334,000 square feet; opened in 1965; 106 associates);
  • Minneapolis Downtown, Minneapolis, MN (1,276,000 square feet; opened in 1902; 280 associates);
  • Northgate, Durham, NC (187,000 square feet; opened in 1994; 72 associates);
  • Columbia, Grand Forks, ND (99,000 square feet; opened in 1978; 53 associates);
  • Moorestown, Moorestown, NJ (200,000 square feet; opened in 1999; 107 associates);
  • Voorhees Town Center, Voorhees, NJ (224,000 square feet; opened in 1970; 77 associates);
  • Preakness, Wayne, NJ (81,000 square feet; opened in 1963; 72 associates);
  • Cottonwood, Albuquerque, NM (173,000 square feet; opened in 1996; 56 associates);
  • Las Vegas Boulevard, Las Vegas, NV (178,000 square feet; opened in 1966; 84 associates);
  • Great Northern, Clay, NY (88,000 square feet; opened in 1989; 55 associates);
  • Oakdale Mall, Johnson City, NY (140,000 square feet; opened in 2000; 58 associates);
  • The Marketplace, Rochester, NY (149,000 square feet; opened in 1982; 77 associates);
  • Eastland, Columbus, OH (121,000 square feet; opened in 2006; 73 associates);
  • Sandusky, Sandusky, OH (133,000 square feet; opened in 1979; 61 associates);
  • Fort Steuben, Steubenville, OH
    (132,000 square feet; opened in 1974; 59 associates);
  • Promenade, Tulsa, OK (180,000 square feet; opened in 1996; 58 associates);
  • Neshaminy, Bensalem, PA (211,000 square feet; opened in 1968; 89 associates);
  • Shenango Valley, Hermitage, PA (106,000 square feet; opened in 1976; 69 associates);
  • Beaver Valley, Monaca, PA (203,000 square feet; opened in 1987; 78 associates);
  • Lycoming, Muncy, PA (120,000 square feet; opened in 1995; 61 associates);
  • Plymouth Meeting, Plymouth Meeting, PA (214,000 square feet; opened in 1966; 74 associates);
  • Washington Crown Center, Washington, PA (148,000 square feet; opened in 1999; 67 associates);
  • Parkdale, Beaumont, TX (171,000 square feet; opened in 2002; 67 associates);
  • Southwest Center, Dallas, TX (148,000 square feet; opened in 1975; 68 associates);
  • Sunland Park, El Paso, TX (105,000 square feet; opened in 2004; 71 associates);
  • Greenspoint, Houston, TX (314,000 square feet; opened in 1976; 70 associates);
  • West Oaks Mall, Houston, TX (244,000 square feet; opened in 1982; 135 associates);
  • Pasadena Town Square, Pasadena, TX (209,000 square feet; opened in 1962; 78 associates);
  • Collin Creek, Plano, TX (199,000 square feet; opened in 1980; 103 associates);
  • Broadway Square, Tyler, TX (100,000 square feet; opened in 1981; 65 associates);
  • Layton Hills, Layton, UT (162,000 square feet; opened in 1980; 72 associates);
  • Cottonwood, Salt Lake City, UT (200,000 square feet; opened in 1962; 88 associates);
  • Landmark, Alexandria, VA (201,000 square feet; opened in 1965; 119 associates);
  • River Ridge, Lynchburg, VA (144,000 square feet; opened in 1980; 60 associates);
  • Everett, Everett, WA (133,000 square feet; opened in 1977; 109 associates);
  • Three Rivers, Kelso, WA (51,000 square feet; opened in 1987; 57 associates);
  • Valley View, La Crosse, WI (101,000 square feet; opened in 1980; 57 associates)

    Other 2017 Closings


  • Simi Valley Town Center (men's/home/kids), Simi Valley, CA (190,000 square feet; opened in 2006; 105 associates);
  • Mall at Tuttle Crossing (furniture/home/kids/men's), Dublin, OH (227,000 square feet; opened in 2003; 52 associates)

    Stores Sold (or to be Sold) and Leased Back


    These stores have been or will be sold, and Macy's will continue to operate them on leases from the owners:
  • Stonestown Galleria, San Francisco, CA (280,000 square feet; opened in 1952; 204 associates);
  • Union Square Men's, San Francisco, CA (248,000 square feet; opened in 1974; 256 associates; as previously announced);
  • Tyson's Galleria, McLean, VA (265,000 square feet; opened in 1988; 122 associates; as previously announced)

    (The number of associates given by store reflects the number of positions eliminated. Many of these associates will be placed in other positions.)

    Store Openings


    Four new Macy's and Bloomingdale's stores are currently planned and/or under construction, as previously announced. New Macy's stores will be opening in:
  • Westfield Century City, Los Angeles, CA (a 155,000 square-foot store to open in spring 2017; Macy's previously operated a 136,000 square-foot store in this location which closed in January 2016);
  • Fashion Place, Murray, UT (160,000 square feet; to open in spring 2017; approximately 150 associates).

    New Bloomingdale's stores will be opening in:
  • Westfield Valley Fair Shopping Center, San Jose, CA (150,000 square feet; to open in spring 2019; approximately 250 associates);
  • The SoNo Collection, Norwalk, CT (150,000 square feet; to open in fall 2019; approximately 200 associates)

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